Question 1

Which of the following best describes the difference between 'quantity demanded' and 'quantity bought' for a product?

Accepted Answer

Quantity demanded is the amount consumers desire to purchase in a given period, while quantity bought refers to actual purchases.

Question 2

Suppose the price of apples decreases from $$80 to 60 $$per bushel. According to the law of demand, what is the expected effect on the quantity demanded, ceteris paribus?

Accepted Answer

Quantity demanded will increase.

Question 3

Which of the following would cause a rightward shift in the demand curve for apples?

Accepted Answer

An increase in population.

Question 4

A movement along the demand curve for apples, rather than a shift of the curve, would be caused by:

Accepted Answer

A change in the price of apples.

Question 5

Which of the following is most likely to shift the supply curve for apples to the right?

Accepted Answer

A technological innovation that reduces production costs.

Question 6

If the price of apples is set above the equilibrium price, what will result in the market?

Accepted Answer

There will be excess supply (surplus) of apples.

Question 7

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

Accepted Answer

$$D = S$$

Question 8

Suppose a new tax is imposed on apple producers. What is the most likely immediate effect on the supply curve for apples?

Accepted Answer

The supply curve will shift to the left.

Question 9

If the price of oranges (a substitute for apples) increases, what is the expected effect on the market for apples?

Accepted Answer

The demand for apples will increase.

Question 10

Which of the following best describes a perfectly competitive market?

Accepted Answer

A market where buyers and sellers are price takers.

Question 11

If both the demand and supply curves for apples shift to the right, what can we say about the new equilibrium quantity and price?

Accepted Answer

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

Question 12

Which of the following is an example of a relative price?

Accepted Answer

The price of apples is twice the price of oranges.

Question 13

A cost-saving innovation in apple production causes the supply curve to shift from $$S_0 to$$ $$S_1. $$What is the likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price decreases and equilibrium quantity increases.

Question 14

Which of the following is NOT a condition required for the demand-and-supply model to accurately describe price determination in a market?

Accepted Answer

A single producer with significant market power.

Question 15

Suppose a severe frost destroys a large portion of the apple crop. What is the most likely effect on the supply curve and equilibrium price?

Accepted Answer

Supply curve shifts left; equilibrium price rises.

Question 16

If the government introduces a subsidy for apple producers, what is the expected effect on the market?

Accepted Answer

The supply curve shifts to the right, leading to a lower equilibrium price.

Question 17

Which of the following scenarios best illustrates a movement along the supply curve for apples?

Accepted Answer

The price of apples increases, and producers offer more apples for sale.

Question 18

If the demand for apples decreases due to a change in consumer tastes, what happens to the equilibrium price and quantity, ceteris paribus?

Accepted Answer

Equilibrium price decreases and equilibrium quantity decreases.

Question 19

Which of the following best explains why the supply curve for apples is upward sloping?

Accepted Answer

As the price of apples increases, producers are willing to supply more because it becomes more profitable.

Demand, Supply, and Price: Microeconomics Study Notes

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