Question 1

Suppose the price of apples falls from $$60 to 40 $$per bushel, ceteris paribus. According to the law of demand, what will happen to the quantity demanded of apples?

Accepted Answer

The quantity demanded will increase because consumers can now satisfy their desire for apples more cheaply.

Question 2

Which of the following would cause a rightward shift in the demand curve for electric cars?

Accepted Answer

An increase in consumer incomes, assuming electric cars are a normal good.

Question 3

A change in which of the following variables will result in a movement along the demand curve, rather than a shift of the demand curve?

Accepted Answer

The price of the product itself.

Question 4

During the COVID-19 pandemic, the demand for restaurant meals decreased while the demand for home cooking ingredients increased. Which economic concept best explains this change?

Accepted Answer

A shift in the demand curve for both restaurant meals and home cooking ingredients.

Question 5

If the supply curve for apples shifts to the right due to improved technology, what is the most likely effect on the equilibrium price and quantity, ceteris paribus?

Accepted Answer

Equilibrium price decreases and equilibrium quantity increases.

Question 6

Which of the following is NOT a condition required for the demand-and-supply model to accurately describe how market prices are determined?

Accepted Answer

The product must be a luxury good.

Question 7

Suppose the government introduces a subsidy for apple producers. What is the most likely effect on the supply curve for apples?

Accepted Answer

The supply curve shifts to the right.

Question 8

Which of the following best describes the difference between a change in supply and a change in quantity supplied?

Accepted Answer

A change in supply is a shift of the entire supply curve; a change in quantity supplied is a movement along the same supply curve.

Question 9

If the price of oranges (a substitute for apples) increases, what is the expected effect on the demand for apples?

Accepted Answer

The demand for apples will increase.

Question 10

Which of the following equations represents the condition for market equilibrium?

Accepted Answer

$$Q_d = Q_s$$

Question 11

Suppose a new health trend increases consumer preference for apples. What will happen in the apple market, ceteris paribus?

Accepted Answer

The demand curve for apples will shift to the right.

Question 12

Which of the following is an example of a relative price?

Accepted Answer

The price of a bushel of apples is twice the price of a bushel of oranges.

Question 13

A leftward shift in the supply curve for fresh vegetables due to a drought will most likely result in:

Accepted Answer

An increase in equilibrium price and a decrease in equilibrium quantity.

Question 14

Which of the following statements about perfectly competitive markets is TRUE?

Accepted Answer

Buyers and sellers are price takers.

Question 15

Suppose the price of a complement good (e.g., peanut butter for jelly) increases. What is the likely effect on the demand for jelly?

Accepted Answer

The demand for jelly will decrease.

Question 16

If the number of suppliers in a market increases, what is the expected effect on the market supply curve?

Accepted Answer

The supply curve shifts to the right.

Question 17

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

Accepted Answer

'Quantity demanded' refers to the amount consumers wish to buy at a specific price, while 'demand' refers to the relationship between price and quantity demanded at all prices.

Question 18

Suppose the price of apples rises from $$60 to 80 $$per bushel, and as a result, the quantity supplied increases from 65,000 to 80,000 bushels. This is an example of:

Accepted Answer

A movement along the supply curve.

Question 19

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

Accepted Answer

A change in the price of apples.

Question 20

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

Accepted Answer

It will definitely increase.

Chapter 3: Demand, Supply, and Price – Microeconomics Study Notes

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