Question 1

Which of the following best describes the law of demand?

Accepted Answer

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

Question 2

Suppose the demand for public transit decreases as average income rises. What type of good is public transit in this scenario?

Accepted Answer

An inferior good

Question 3

If the price of hamburgers increases, what is the likely effect on the demand for hot dogs, assuming they are substitutes?

Accepted Answer

The demand for hot dogs will increase.

Question 4

Which of the following would cause a movement along the demand curve for coffee, rather than a shift of the demand curve?

Accepted Answer

A decrease in the price of coffee

Question 5

Which of the following is NOT a determinant of the quantity supplied of a good?

Accepted Answer

Consumer preferences

Question 6

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

Accepted Answer

A technological innovation in apple harvesting

Question 7

If the market for wheat is in equilibrium and there is a sudden increase in the price of fertilizer (an input), what is the most likely effect on the equilibrium price and quantity of wheat?

Accepted Answer

Equilibrium price increases, equilibrium quantity decreases

Question 8

Which of the following equations represents a market in equilibrium, given the demand and supply functions $$Q^D = 100 - 3p$$ and $$Q^S = 20 + 2p$$?

Accepted Answer

$$100 - 3p = 20 + 2p$$

Question 9

A government imposes a new excise tax on the production of cigarettes. What is the most likely effect on the supply curve for cigarettes?

Accepted Answer

The supply curve shifts to the left

Question 10

Which of the following best describes an exogenous variable in the context of the demand and supply model?

Accepted Answer

A variable determined outside the model, such as consumer income

Question 11

Suppose a cold winter increases the demand for electricity for heating. What happens to the equilibrium price and quantity of electricity?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases

Question 12

If the price of gasoline rises, what is the expected effect on the demand for bicycles, assuming they are substitutes?

Accepted Answer

The demand for bicycles will increase

Question 13

Which of the following statements is true regarding a shift in the demand curve?

Accepted Answer

A shift in the demand curve is caused by changes in factors such as income, preferences, or prices of other goods.

Question 14

Given the demand function $$Q^D = 100 - 3p$$ and the supply function $$Q^S = 20 + 2p$$, what is the equilibrium price?

Accepted Answer

$$p = 16$$

Question 15

Which of the following would most likely cause the supply curve for cocoa beans to shift to the right?

Accepted Answer

A technological improvement in cocoa bean harvesting

Question 16

If the population of a city increases, what is the expected effect on the demand for housing in that city?

Accepted Answer

The demand for housing will increase

Question 17

Which of the following best describes comparative statics in economics?

Accepted Answer

Analyzing the effect of a change in one exogenous variable on the equilibrium outcome

Question 18

Suppose a new government subsidy is introduced for electric cars. What is the likely effect on the supply curve for electric cars?

Accepted Answer

The supply curve shifts to the right

Question 19

Which of the following is an example of complements in consumption?

Accepted Answer

Hamburgers and buns

Question 20

If a market is in equilibrium and there is a sudden increase in demand, what will happen to the equilibrium price and quantity?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases

Demand, Supply, and Price: Foundations of Market Equilibrium

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