Question 1

Which of the following best describes a market in microeconomics?

Accepted Answer

Any setting that brings together potential buyers and sellers to exchange goods, services, or resources.

Question 2

In a perfectly competitive market, which of the following is true?

Accepted Answer

Both buyers and sellers are price-takers because each is small relative to the overall market.

Question 3

Market equilibrium occurs when:

Accepted Answer

Quantity demanded equals quantity supplied.

Question 4

Suppose the price of gas is set above the equilibrium price. What is the likely result?

Accepted Answer

A surplus, because quantity supplied exceeds quantity demanded.

Question 5

If the price of cookies is $2, and at that price the quantity demanded is 24 while the quantity supplied is 3, what is the market condition?

Accepted Answer

There is a shortage of 21 cookies.

Question 6

Which of the following is a symptom of a market shortage, as seen with the Nintendo Switch release?

Accepted Answer

Long lines and bundling of products to raise the effective price.

Question 7

If both the supply and demand curves shift to the left, what can we say about the new equilibrium?

Accepted Answer

Quantity will definitely fall, but the effect on price is ambiguous.

Question 8

Given the following market data for cookies: At $3, quantity supplied is 20 and quantity demanded is 20. At $4, quantity supplied is 46 and quantity demanded is 15. What is the equilibrium price and quantity?

Accepted Answer

$3 and 20 cookies

Question 9

If the price and quantity of a good both rise, which of the following must have occurred?

Accepted Answer

Demand increased.

Question 10

Suppose the introduction of a new technology reduces the marginal cost of producing e-books, leading to increased sales and lower prices. What does this indicate about the market for e-books?

Accepted Answer

The supply curve shifted to the right.

Question 11

Which equation represents the condition for market equilibrium?

Accepted Answer

$Q_s = Q_d$

Question 12

If a complement good’s price decreases, what is the likely effect on the demand for the original good?

Accepted Answer

Demand for the original good increases.

Question 13

A decrease in supply, with demand unchanged, will result in:

Accepted Answer

A higher equilibrium price and lower equilibrium quantity.

Question 14

Which of the following best explains why secondary markets (like eBay) emerge during shortages?

Accepted Answer

To allow buyers to purchase goods at prices above the official market price.

Question 15

If the price of a substitute good increases, what is the likely effect on the market for the original good?

Accepted Answer

Demand for the original good increases.

Question 16

Which of the following is NOT a function of markets?

Accepted Answer

Setting prices through government intervention.

Question 17

If a market is out of equilibrium and there is a surplus, what will happen to the price over time?

Accepted Answer

The price will fall.

Question 18

Which of the following real-world examples best illustrates a posted price market?

Accepted Answer

A coffee shop menu with fixed prices for drinks.

Question 19

If the supply of a good increases while demand remains constant, what happens to equilibrium price and quantity?

Accepted Answer

Equilibrium price falls and equilibrium quantity rises.

Question 20

Suppose the market for cookies moves from an equilibrium at $P=3$ and $Q=20$ to a new equilibrium at a higher price and higher quantity. Which of the following could explain this shift?

Accepted Answer

An increase in demand.

Lecture 1: Market Equilibrium and Predicting Market Changes

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