Question 1

Which of the following best describes the difference between 'demand' and 'quantity demanded'?

Accepted Answer

Demand refers to the entire relationship between price and the quantity consumers are willing to buy, while quantity demanded refers to a specific amount at a particular price.

Question 2

Suppose the price of coffee increases. According to the law of demand, what will happen to the quantity demanded of coffee, ceteris paribus?

Accepted Answer

The quantity demanded will decrease.

Question 3

Which of the following would cause a shift of the demand curve for new cars to the right?

Accepted Answer

An increase in consumer incomes, assuming new cars are normal goods.

Question 4

If the price of tea increases and, as a result, the demand for coffee increases, what is the relationship between tea and coffee?

Accepted Answer

They are substitutes.

Question 5

Which of the following is an example of an inferior good?

Accepted Answer

Generic brand instant noodles, which people buy less of as their income rises.

Question 6

What causes a movement along the supply curve for a product?

Accepted Answer

A change in the price of the product itself.

Question 7

Suppose the supply curve for wheat shifts to the left. Which of the following could explain this shift?

Accepted Answer

An increase in the cost of fertilizer, an input for wheat production.

Question 8

Which of the following best explains why the supply curve slopes upward?

Accepted Answer

As the price increases, producers are willing to supply more because it becomes more profitable.

Question 9

If both the demand and supply curves for a product shift to the right, what can be said about the new equilibrium?

Accepted Answer

Equilibrium quantity will increase, but the change in equilibrium price is ambiguous.

Question 10

Given the following demand and supply equations for a market: $$Q_D = 100 - 2P$$ and $$Q_S = 20 + 3P$$, what is the equilibrium price?

Accepted Answer

$$P = 16$$

Question 11

A decrease in the price of peanut butter leads to an increase in the demand for jelly. What does this indicate about the relationship between peanut butter and jelly?

Accepted Answer

They are complements.

Question 12

Which of the following is NOT a determinant of demand?

Accepted Answer

The cost of production for the good.

Question 13

If the market price is above the equilibrium price, what will result?

Accepted Answer

A surplus will occur, causing downward pressure on price.

Question 14

Which of the following would cause a movement along the demand curve for pizza?

Accepted Answer

A decrease in the price of pizza.

Question 15

Suppose the supply of smartphones increases due to technological innovation. What happens to the equilibrium price and quantity, ceteris paribus?

Accepted Answer

Equilibrium price decreases and equilibrium quantity increases.

Question 16

If the demand for a good increases while the supply remains unchanged, what will happen to the equilibrium price and quantity?

Accepted Answer

Both equilibrium price and quantity will increase.

Question 17

Which of the following would NOT cause a shift in the supply curve for laptops?

Accepted Answer

A decrease in the price of laptops.

Question 18

If the supply curve for a product shifts to the right and the demand curve shifts to the left, what can be said about the new equilibrium?

Accepted Answer

Equilibrium price will decrease, but the change in equilibrium quantity is ambiguous.

Question 19

A market is in equilibrium when:

Accepted Answer

Quantity demanded equals quantity supplied at the prevailing price.

Question 20

Suppose the market for oranges is described by the following equations: $$Q_D = 200 - 4P$$ and $$Q_S = 40 + 2P. $$Calculate the equilibrium quantity.

Accepted Answer

$$Q = 140$$

Supply and Demand: Core Concepts and Applications

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