Question 1

Which of the following best describes the meaning of 'relative price' in microeconomics?

Accepted Answer

An opportunity cost, but not simply the money price of a good.

Question 2

Refer to the first graph (apples). What does point A indicate?

Accepted Answer

If the price is $1, consumers will plan to buy 4,000 apples.

Question 3

Refer to the second graph (pizzas). Which of the following represents a decrease in quantity demanded?

Accepted Answer

A movement from B to A.

Question 4

Which of the following is NOT held constant along a demand curve?

Accepted Answer

The price of the good itself

Question 5

Which market is an example of a market for factors of production?

Accepted Answer

Labour market

Question 6

Which of the following quotations refers to a leftward shift of the demand curve?

Accepted Answer

"It has been an unusually mild winter; our sales of wool scarves are down from last year."

Question 7

The law of supply tells us that, other things remaining the same, as the price of gasoline falls:

Accepted Answer

The quantity of gasoline supplied decreases.

Question 8

A decrease in the quantity supplied is shown by:

Accepted Answer

A movement down along the supply curve.

Question 9

Which of the following will shift the supply curve of good X rightward?

Accepted Answer

A decrease in the wages of workers employed to produce good X.

Question 10

Refer to the third graph (market equilibrium). At price $$P_2$$, which one of the following is NOT true?

Accepted Answer

This market is in equilibrium.

Question 11

Refer to the fourth graph (price = $$10$$ per unit). What is true at this price?

Accepted Answer

There is a surplus of 200 units.

Question 12

Which one of the following correctly describes how price adjustment eliminates a surplus?

Accepted Answer

As the price falls, the quantity demanded increases and the quantity supplied decreases.

Question 13

A surplus exists if:

Accepted Answer

The price is above the equilibrium price.

Question 14

Given the demand curve $$P = 700 - 10Q_D$$ and the supply curve $$P = 400 + 5Q_S$$, what is the equilibrium quantity and price?

Accepted Answer

Equilibrium quantity is $$20$$ and equilibrium price is $$500.$$

Question 15

Refer to the fifth graph (demand and supply shifts). If the demand curve for good A is initially $$D_2$$ and the price of a substitute good B falls, what happens?

Accepted Answer

There will be a surplus of good A at $$P_2.$$

Question 16

Refer to the sixth graph (multiple equilibria). If the price of pizza, a complement of beer, rises, what is the new beer equilibrium?

Accepted Answer

Point 3

Question 17

Suppose we observe a rise in the price of good A and a decrease in the quantity of good A bought and sold. Which one of the following is a likely explanation?

Accepted Answer

The supply of A decreased.

Question 18

If demand decreases and supply increases, then the:

Accepted Answer

Equilibrium price falls, but the effect on the equilibrium quantity is unknown.

Question 19

Which of the following events leads to a rise in the price of oranges?

Accepted Answer

A rise in the price of apples if apples and oranges are substitutes.

Question 20

Refer to the following scenario: If the price is set at $$80 in $$the market for car-seat heaters, there will be a:

Accepted Answer

Surplus of 200 units and price will fall.

Microeconomics: Supply, Demand, and Market Equilibrium Practice Guidance

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