Question 1

Suppose the price of coffee increases significantly. According to the law of demand, what is the most likely effect on the quantity demanded of coffee, ceteris paribus?

Accepted Answer

The quantity demanded of coffee will decrease.

Question 2

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

Accepted Answer

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

Question 3

If the market for apples is initially in equilibrium and a new technology reduces the cost of harvesting apples, what is the most likely effect on the equilibrium price and quantity of apples?

Accepted Answer

Equilibrium price decreases and equilibrium quantity increases.

Question 4

Which of the following best describes an inferior good?

Accepted Answer

A good for which demand decreases as income increases.

Question 5

Suppose the demand and supply for a product are given by the following equations:

$$Q^D = 100 - 3p$$

$$Q^S = 20 + 2p$$

What is the equilibrium price?

Accepted Answer

$$p = 16$$

Question 6

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

Accepted Answer

A decrease in the price of ice cream.

Question 7

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

Accepted Answer

The demand for hot dogs will increase.

Question 8

Which of the following is an exogenous variable in the standard demand and supply model?

Accepted Answer

Consumer income

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 the law of supply?

Accepted Answer

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

Question 11

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

Accepted Answer

Equilibrium price increases and equilibrium quantity increases.

Question 12

Which of the following would cause the supply curve for wheat to shift to the left?

Accepted Answer

A drought that destroys a large portion of the wheat crop.

Question 13

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 14

Which of the following statements is true regarding market equilibrium?

Accepted Answer

At equilibrium, quantity demanded equals quantity supplied.

Question 15

Suppose the demand for public transit decreases as consumer incomes rise. What type of good is public transit in this scenario?

Accepted Answer

An inferior good

Question 16

If the price of buns (a complement to hamburgers) increases, what is the expected effect on the demand for hamburgers?

Accepted Answer

The demand for hamburgers will decrease.

Question 17

Which of the following is an example of comparative statics in economics?

Accepted Answer

Measuring the change in equilibrium price and quantity after a shift in supply.

Question 18

Suppose the supply and demand for a product are given by:

$$Q^D = 120 - 4p$$

$$Q^S = 30 + 2p$$

What is the equilibrium quantity traded?

Accepted Answer

$$Q = 70$$

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 there is excess demand in a market, what is likely to happen to the price?

Accepted Answer

The price will rise.

Demand, Supply, and Price: Microeconomic Foundations and Market Equilibrium

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