Question 1

Suppose the demand curve for a product is given by $$Q_D = 1000 - 20P$$ and the supply curve is $$Q_S = 200P - 200. $$What is the equilibrium price in the market?

Accepted Answer

$$P = 4$$

Question 2

Which of the following would most likely cause a rightward shift in the supply curve for tomatoes?

Accepted Answer

The development of a new harvesting technology

Question 3

If the price elasticity of demand for a good is $$-2$$, what does this imply about consumer responsiveness?

Accepted Answer

A 1% increase in price leads to a 2% decrease in quantity demanded

Question 4

Which of the following best describes a 'complement' in microeconomics?

Accepted Answer

A good that is consumed together with another good

Question 5

A price ceiling is set below the market equilibrium price for a rental apartment. What is the most likely unintended outcome?

Accepted Answer

Shortage of apartments

Question 6

If the supply curve is $$Q_S = 200P - 200$$, what is the supply choke price?

Accepted Answer

$$P = 1$$

Question 7

Which of the following is true about perfectly elastic supply?

Accepted Answer

Any price change leads to an infinite change in quantity supplied

Question 8

If a market for a good is characterized by many close substitutes, what can you infer about the price elasticity of demand?

Accepted Answer

It is likely to be high (elastic)

Question 9

Which formula correctly expresses the price elasticity of supply?

Accepted Answer

$$E_S = \frac{\%\Delta Q_S}{\%\Delta P}$$

Question 10

A decrease in the price of butter leads to an increase in the quantity demanded of bread. What type of relationship do these goods have?

Accepted Answer

They are complements

Question 11

If the demand curve is $$Q_D = 1000 - 20P$$, what is the demand choke price?

Accepted Answer

$$P = 50$$

Question 12

Which of the following is NOT a factor that influences demand?

Accepted Answer

Production technology

Question 13

Suppose the price of a normal good increases. What is the expected effect on quantity demanded?

Accepted Answer

Quantity demanded decreases

Question 14

Which of the following best describes consumer surplus?

Accepted Answer

The difference between what consumers are willing to pay and what they actually pay

Question 15

If a market is in equilibrium, which of the following must be true?

Accepted Answer

Quantity demanded equals quantity supplied

Question 16

A leftward shift in the supply curve is most likely caused by:

Accepted Answer

An increase in production costs

Question 17

Which of the following is true about a perfectly inelastic demand curve?

Accepted Answer

Quantity demanded does not change as price changes

Question 18

If the price elasticity of supply is greater than 1, supply is considered:

Accepted Answer

Elastic

Question 19

Which of the following would increase producer surplus in a competitive market?

Accepted Answer

An increase in market price

Question 20

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

Accepted Answer

The goods are substitutes

Microeconomics Study Notes: Supply, Demand, Elasticity, and Market Surplus

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