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 coffee increases. According to the law of demand, what is the expected effect on the quantity demanded of coffee, all else equal?

Accepted Answer

The quantity demanded will decrease.

Question 3

Which of the following would cause a shift of the demand curve for apples to the right?

Accepted Answer

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

Question 4

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 5

If the price of a complement to good X decreases, what is the likely effect on the demand for good X?

Accepted Answer

The demand for good X will increase.

Question 6

Which of the following best describes a movement along the demand curve?

Accepted Answer

A change in the price of the good itself.

Question 7

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 will shift to the right.

Question 8

At the equilibrium price in a perfectly competitive market:

Accepted Answer

Quantity demanded equals quantity supplied.

Question 9

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

Accepted Answer

It will increase.

Question 10

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

Accepted Answer

$$Q_d = Q_s$$

Question 11

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

Accepted Answer

The supply curve shifts to the left.

Question 12

Which of the following is an example of a change in quantity supplied, rather than a change in supply?

Accepted Answer

A decrease in the price of the good itself.

Question 13

If the price of a normal good increases, what happens to the quantity demanded and the demand curve?

Accepted Answer

Quantity demanded decreases; there is a movement up along the demand curve.

Question 14

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

Accepted Answer

The product is homogeneous.

Question 15

If the number of consumers in a market increases, what is the likely effect on the demand curve?

Accepted Answer

The demand curve shifts to the right.

Question 16

Suppose the price of wheat rises from $$60 to 80 $$per bushel, and the quantity supplied increases from 65,000 to 85,000 bushels. This is an example of:

Accepted Answer

A movement along the supply curve.

Question 17

Which of the following best defines a relative price?

Accepted Answer

The price of one good in terms of another good.

Question 18

During the COVID-19 pandemic, the demand for hand sanitizer increased while supply was restricted. What was the likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price increased; equilibrium quantity increased.

Question 19

If the supply of a product decreases while demand remains unchanged, what happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price increases; equilibrium quantity decreases.

Question 20

Which of the following is an example of a flow variable in economics?

Accepted Answer

The quantity demanded of apples per week.

Microeconomics Chapter 3: Demand, Supply, and Price Determination

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