Question 1

Which of the following best defines a market in microeconomics?

Accepted Answer

A group of economic agents trading a good or service, plus the rules and arrangements for trading.

Question 2

In a perfectly competitive market, which of the following is true?

Accepted Answer

Buyers and sellers are price-takers and cannot influence the market price.

Question 3

According to the law of demand, what happens when the price of a good decreases, holding all else equal?

Accepted Answer

The quantity demanded increases.

Question 4

Which of the following would cause a movement along the demand curve for Café Biscuit’s Luxe Boba?

Accepted Answer

A decrease in the price of Luxe Boba.

Question 5

If the number of buyers in a market increases, what happens to the demand curve?

Accepted Answer

It shifts to the right.

Question 6

Suppose students receive a stimulus check and buy more Luxe Boba but fewer leftover bagels. What does this indicate?

Accepted Answer

Luxe Boba is a normal good; leftover bagels are an inferior good.

Question 7

If the price of a substitute for Luxe Boba (e.g., Cafe Louie Boba) increases, what happens to the demand for Luxe Boba?

Accepted Answer

Demand for Luxe Boba increases (shifts right).

Question 8

Which of the following is a supply shift factor?

Accepted Answer

A change in input prices.

Question 9

If the cost of Uji Matcha (an input for Luxe Boba) increases due to tariffs, what happens to the supply of Luxe Boba?

Accepted Answer

Supply shifts left (decreases).

Question 10

Which equation represents the condition for competitive equilibrium in a market?

Accepted Answer

$$ Q_s = Q_d $$

Question 11

During the U.S. oil crisis of 1973–1974, the government capped the price of gasoline below equilibrium. What was the likely result?

Accepted Answer

A shortage of gasoline.

Question 12

If a major oil exporter suddenly ceases production, as Libya did in 2011, what happens in the oil market?

Accepted Answer

It is a supply shift to the left.

Question 13

Suppose new technology makes oil extraction cheaper and, at the same time, environmental concerns reduce demand for oil. What is the effect on equilibrium quantity?

Accepted Answer

The effect on equilibrium quantity is ambiguous and depends on the magnitude of each shift.

Question 14

A new study finds that matcha is 'Super-Healthy,' increasing demand, while labor costs rise, decreasing supply. What can we say about the new equilibrium?

Accepted Answer

Price increases; quantity is ambiguous.

Question 15

Why do brown eggs typically cost more than white eggs?

Accepted Answer

Brown eggs are more expensive to produce due to the breed of chicken.

Question 16

Which of the following would NOT cause a shift in the demand curve for a good?

Accepted Answer

A change in the price of the good itself.

Question 17

If the price of roses increases right before Valentine’s Day, which is the most likely explanation?

Accepted Answer

An increase in the demand for roses.

Question 18

Which of the following best describes a movement along the supply curve?

Accepted Answer

A change in the product’s own price.

Question 19

If the price of beer does NOT increase right before Super Bowl Sunday, despite higher demand, what is a likely explanation?

Accepted Answer

Sellers anticipate the demand increase and adjust supply accordingly.

Question 20

Which of the following is the correct sequence for analyzing a market shock?

Accepted Answer

Identify what changed, determine which curve moves, and analyze the effect on equilibrium price and quantity.

Study Guide: Demand, Supply, and Equilibrium in Microeconomics

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