Question 1

A new video game is introduced and consumers rush to buy it. Assume the supply curve does not change. What happens to the equilibrium price and quantity of the game?

Accepted Answer

Price and quantity both increase

Question 2

Workers at Ford’s assembly plant win a 10% increase in pay and Ford passes the cost to consumers. Demand does not change. What happens to the equilibrium price and quantity of Ford automobiles?

Accepted Answer

Price increases and quantity decreases

Question 3

Coke and Pepsi are substitutes. The price of Coke increases. There is no change in the supply of Pepsi. What happens to the equilibrium price and quantity of Pepsi?

Accepted Answer

Price of Pepsi increases and quantity of Pepsi increases

Question 4

Beef and leather are complements in production. The price of beef increases. Assume no change in demand for leather. What happens to the equilibrium price and quantity of leather?

Accepted Answer

Price of leather decreases, quantity of leather increases

Question 5

If the demand for a product increases while the supply remains constant, what will happen to the equilibrium price and quantity?

Accepted Answer

Both equilibrium price and quantity will increase

Question 6

Suppose the supply of a good increases while demand remains unchanged. What is the likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price decreases, equilibrium quantity increases

Question 7

If the government imposes a price ceiling below the equilibrium price, what is the most likely outcome?

Accepted Answer

A shortage will occur

Question 8

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 9

If the cross-price elasticity of demand between two goods is positive, what does this imply?

Accepted Answer

The goods are substitutes

Question 10

Suppose the demand for a product is given by $$ Q_d = 100 - 2P $$ and the supply is $$ Q_s = 4P . $$What is the equilibrium price?

Accepted Answer

$$ P = 20 $$

Question 11

Suppose the supply curve for a good shifts to the left due to an increase in production costs. What is the likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price increases, equilibrium quantity decreases

Question 12

If a decrease in the price of good X leads to a decrease in the demand for good Y, what is the relationship between X and Y?

Accepted Answer

X and Y are substitute goods

Question 13

If the demand for a good is perfectly inelastic, what happens to the quantity demanded when the price increases?

Accepted Answer

Quantity demanded does not change

Question 14

Suppose the government imposes a tax on sellers. What is the immediate effect on the supply curve?

Accepted Answer

The supply curve shifts to the left

Question 15

If the demand for a normal good increases as income rises, which of the following is true?

Accepted Answer

The good has a positive income elasticity of demand

Microeconomics Study Guide: Supply and Demand Interactions

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