Question 1

Which of the following best describes the law of demand?

Accepted Answer

As the price of a product increases, the quantity demanded decreases, ceteris paribus.

Question 2

Suppose the price of apples falls from $$80 to 60 $$per bushel. According to the demand schedule, what happens to the quantity demanded?

Accepted Answer

The quantity demanded increases.

Question 3

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

Accepted Answer

An increase in population.

Question 4

What is the difference between a movement along the demand curve and a shift of the demand curve?

Accepted Answer

A movement along the demand curve is caused by a change in price, while a shift is caused by a change in a non-price determinant.

Question 5

Which of the following is NOT a factor that shifts the supply curve for a good?

Accepted Answer

A change in the price of the good itself.

Question 6

If the government imposes a new tax on the production of apples, what is the likely effect on the supply curve?

Accepted Answer

The supply curve will shift to the left.

Question 7

At the equilibrium price, which of the following is true?

Accepted Answer

Quantity demanded equals quantity supplied.

Question 8

Suppose there is an increase in demand for hand sanitizer due to a pandemic, while supply remains unchanged. What happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases.

Question 9

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

Accepted Answer

$$ Q_d = Q_s $$

Question 10

If the supply of a product increases while demand remains constant, what is the effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price decreases, equilibrium quantity increases.

Question 11

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

Accepted Answer

The price of a loaf of bread in terms of bus tickets is $$ \frac{3}{2} $$ bus tickets per loaf.

Question 12

Which of the following is a necessary condition for the demand-and-supply model to accurately describe a market?

Accepted Answer

The product must be homogeneous.

Question 13

Suppose a new technology reduces the cost of producing electric cars. What is the likely effect on the supply curve for electric cars?

Accepted Answer

The supply curve shifts to the right.

Question 14

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

Accepted Answer

The demand for apples increases.

Question 15

During the COVID-19 pandemic, government borrowing increased to provide income relief. What is the immediate effect of this policy on the demand or supply of goods and services?

Accepted Answer

It increases the demand for goods and services.

Question 16

Which of the following best describes a change in quantity supplied?

Accepted Answer

A movement from one point to another on the supply curve due to a change in price.

Question 17

If both demand and supply increase simultaneously, what is the effect on equilibrium quantity?

Accepted Answer

Equilibrium quantity will increase.

Question 18

Suppose the market for wheat is perfectly competitive. Which of the following is true?

Accepted Answer

All buyers and sellers are price takers.

Question 19

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

Accepted Answer

A change in the price of coffee.

Question 20

If the price of a product is above the equilibrium price, what will happen in the market?

Accepted Answer

There will be excess supply, causing the price to fall.

Demand, Supply, and Price Determination in Microeconomics

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