Question 1

Which of the following best describes a perfectly competitive market?

Accepted Answer

A market where all sellers offer identical goods and no individual buyer or seller can affect the market price.

Question 2

Suppose the demand for gasoline is given by $Q_D = 350 - 50P$. What is the inverse demand function?

Accepted Answer

$P = 7 - \frac{Q_D}{50}$

Question 3

Which of the following would cause a movement along the demand curve for apples?

Accepted Answer

A change in the price of apples.

Question 4

If the supply curve for a good shifts to the right, which of the following is the most likely cause?

Accepted Answer

An improvement in technology.

Question 5

Consider the market for roses before Valentine’s Day. Which of the following best explains why the price increases?

Accepted Answer

The demand for roses increases as more buyers want to purchase roses.

Question 6

Given the demand function $Q_D = 20 - 2P$ and the supply function $Q_S = 2P$, what is the equilibrium price and quantity?

Accepted Answer

$P^* = 5, Q^* = 10$

Question 7

If the number of buyers in a market increases, what happens to the demand curve?

Accepted Answer

It shifts to the right.

Question 8

Which of the following scenarios would result in excess supply in a market?

Accepted Answer

The quantity supplied exceeds the quantity demanded at the current price.

Question 9

Brown eggs tend to cost more than white eggs primarily because:

Accepted Answer

The hens that lay brown eggs are larger and require more food, increasing production costs.

Question 10

If both the demand curve and the supply curve for a product shift to the right, what happens to the equilibrium quantity?

Accepted Answer

It increases.

Question 11

Suppose a drought causes the supply curve for ground beef to shift left. What is the most likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price increases and equilibrium quantity decreases.

Question 12

Which of the following is NOT a reason for a shift in the demand curve?

Accepted Answer

A change in the product's own price.

Question 13

If the supply of masks is $Q_S = 2P$ and the demand triples to $Q_D = 60 - 6P$, what is the new equilibrium price?

Accepted Answer

$P^* = 5$

Question 14

Which of the following best describes the law of supply?

Accepted Answer

As the price rises, the quantity supplied rises, holding all else equal.

Question 15

A market is defined as:

Accepted Answer

A group of economic agents trading a good or service plus the rules and arrangements for trading.

Question 16

If the equilibrium price in a market is negative, as in the crude oil market in Cushing, Oklahoma on April 20, 2020, what does this indicate?

Accepted Answer

Sellers are paying buyers to take the good due to excess supply and storage constraints.

Question 17

Which of the following would cause a leftward shift of the supply curve for corn?

Accepted Answer

A decrease in the number of corn farmers.

Question 18

If the price of a complement good increases, what happens to the demand for the original good?

Accepted Answer

Demand for the original good decreases.

Question 19

Which of the following is true about the competitive equilibrium price?

Accepted Answer

It is the price at which quantity demanded equals quantity supplied.

Question 20

If a new technology makes it easier to access oil reserves, what is the likely effect on the oil market?

Accepted Answer

The supply curve shifts right, increasing equilibrium quantity.

Lecture 4:Introduction to Supply, Demand, and Competitive Equilibrium in Microeconomics

Study Guide - Practice Questions