Question 1

Which of the following best describes the Law of Demand?

Accepted Answer

If the price of a good rises, the quantity demanded of that good decreases, ceteris paribus.

Question 2

Suppose the price of oranges increases. What is the likely effect on the demand for apples, assuming apples and oranges are substitutes?

Accepted Answer

The demand for apples will increase.

Question 3

Which of the following events would cause a leftward shift in the demand curve for bottled water?

Accepted Answer

The invention of a new zero-calorie sports drink that is a substitute for bottled water.

Question 4

If the price of a complement in production rises, what happens to the supply of the related good?

Accepted Answer

The supply of the related good increases.

Question 5

Which equation correctly represents market equilibrium?

Accepted Answer

$$ Q_d = Q_s $$

Question 6

A decrease in supply, with demand remaining constant, will have what effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price rises and equilibrium quantity decreases.

Question 7

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

Accepted Answer

Equilibrium quantity increases; equilibrium price is ambiguous.

Question 8

Which of the following is NOT a determinant of demand?

Accepted Answer

Productivity

Question 9

A severe hurricane destroys crops in a region. What is the likely effect on the supply curve for those crops?

Accepted Answer

The supply curve shifts leftward.

Question 10

If the price of a normal good increases, what happens to the quantity demanded, assuming all other factors remain constant?

Accepted Answer

Quantity demanded decreases.

Question 11

Which of the following best describes a shortage in a market?

Accepted Answer

Quantity demanded exceeds quantity supplied.

Question 12

Suppose the price of a substitute in production rises. What is the likely effect on the supply of the original good?

Accepted Answer

Supply of the original good decreases.

Question 13

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

Accepted Answer

A change in the price of the good itself.

Question 14

If the number of sellers in a market increases, what happens to the market supply?

Accepted Answer

Market supply increases.

Question 15

Which of the following is the correct formula for market demand, given two individual demand curves $$ Q_{d1} $$ and $$ Q_{d2} $$?

Accepted Answer

$$ Q_{d} = Q_{d1} + Q_{d2} $$

Question 16

A decrease in the price of a complement will have what effect on the demand for the original good?

Accepted Answer

Demand for the original good increases.

Question 17

If income is expected to increase in the future, what is the likely effect on current demand for big-ticket items?

Accepted Answer

Current demand increases.

Question 18

Which of the following scenarios would result in a surplus in the market for bottled water?

Accepted Answer

Quantity supplied is greater than quantity demanded at the current price.

Question 19

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

Accepted Answer

Equilibrium quantity decreases; equilibrium price is ambiguous.

Question 20

In August, the Californian avocado crop winds down and the Mexican crop takes over. If Mexican production is not ramped up enough, what happens to the price and quantity of avocados?

Accepted Answer

Price rises and quantity bought decreases.

Microeconomics: Demand, Supply, and Market Equilibrium

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