Question 1

Suppose the price of apples decreases 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.

Question 2

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

Accepted Answer

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

Question 3

Which of the following best describes 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 4

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

Accepted Answer

The demand for apples will increase.

Question 5

Which of the following is NOT a factor that would shift the supply curve for wheat?

Accepted Answer

A change in the price of wheat.

Question 6

Suppose a new technology reduces the cost of producing smartphones. What is the likely effect on the supply curve and equilibrium price, ceteris paribus?

Accepted Answer

The supply curve shifts right and the equilibrium price falls.

Question 7

At the equilibrium price in a perfectly competitive market, which of the following is true?

Accepted Answer

Quantity demanded equals quantity supplied.

Question 8

If a government subsidy is introduced for electric vehicles, what is the most likely immediate effect on the market for electric vehicles?

Accepted Answer

The supply curve shifts to the right, lowering the equilibrium price.

Question 9

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

Accepted Answer

$$Q_d = Q_s$$

Question 10

During the COVID-19 pandemic, the demand for home exercise equipment increased while supply was restricted due to factory closures. What was the likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price increased, but the effect on equilibrium quantity is ambiguous.

Question 11

Which of the following best describes a 'flow' variable in economics?

Accepted Answer

Quantity demanded per week.

Question 12

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

Accepted Answer

There will be excess supply, creating downward pressure on price.

Question 13

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

Accepted Answer

There are many buyers and sellers, each too small to affect the market price.

Question 14

Suppose the government imposes a tax on the production of soft drinks. What is the likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 15

If the population of a city increases significantly, what is the likely effect on the market for rental apartments, ceteris paribus?

Accepted Answer

The demand curve for apartments shifts to the right.

Question 16

Which of the following best defines the relative price of a good?

Accepted Answer

The price of one good in terms of another good.

Question 17

A leftward shift of the supply curve for coffee could be caused by:

Accepted Answer

A drought that destroys coffee crops.

Question 18

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

Accepted Answer

Equilibrium quantity will increase.

Question 19

Which of the following is an example of a movement along the supply curve?

Accepted Answer

A decrease in the price of wheat leads to a decrease in the quantity supplied of wheat.

Question 20

Suppose the price of beef rises, and as a result, the quantity supplied of beef increases. Which economic principle does this illustrate?

Accepted Answer

The law of supply.

Microeconomics Chapter 3: Demand, Supply, and Market Equilibrium

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