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 price of gasoline increases. According to the law of demand, what is the expected effect on the quantity of gasoline demanded, holding all else equal?

Accepted Answer

The quantity demanded will decrease.

Question 3

Which of the following would cause a shift of the demand curve for smartphones to the right?

Accepted Answer

An increase in the number of buyers in the market.

Question 4

If the price of wheat, an input for bread, rises significantly, what is the likely effect on the supply curve for bread?

Accepted Answer

The supply curve for bread will shift to the left.

Question 5

Which of the following is the only reason for a movement along the demand curve for a product?

Accepted Answer

A change in the product's own price.

Question 6

Suppose a new technology reduces the cost of producing electric cars. What is the expected effect on the market supply curve for electric cars?

Accepted Answer

The supply curve will shift to the right.

Question 7

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

Accepted Answer

A shortage of gasoline.

Question 8

Which of the following equations represents the condition for competitive equilibrium in a market?

Accepted Answer

$Q_d = Q_s$

Question 9

A decrease in the price of coffee, a substitute for tea, will likely have what effect on the demand for tea?

Accepted Answer

The demand for tea will decrease.

Question 10

If both the demand and supply curves for a product shift to the right, what can be said about the new equilibrium quantity?

Accepted Answer

The equilibrium quantity will increase.

Question 11

Which of the following would NOT cause a shift in the supply curve for laptops?

Accepted Answer

A decrease in the price of laptops.

Question 12

Suppose the market for apartments in a city is in equilibrium. If the city government imposes rent control (a maximum price below equilibrium), what is the likely result?

Accepted Answer

A shortage of apartments.

Question 13

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

Accepted Answer

Equilibrium price will increase and equilibrium quantity will increase.

Question 14

Which of the following best explains why brown eggs typically cost more than white eggs in the market?

Accepted Answer

The supply of brown eggs is more expensive to produce.

Question 15

A leftward shift of the demand curve for a product, with supply held constant, will result in:

Accepted Answer

A lower equilibrium price and lower equilibrium quantity.

Question 16

Which of the following is an example of a complement to gasoline?

Accepted Answer

Automobile tires.

Question 17

If corn farmers expect the price of corn to rise in the future, what is the likely effect on the current supply of corn?

Accepted Answer

Current supply will decrease as farmers hold back stock.

Question 18

Which of the following statements about market equilibrium is correct?

Accepted Answer

At equilibrium, quantity supplied equals quantity demanded.

Question 19

Suppose the price of a complement good (such as printers for computers) falls. What is the likely effect on the demand for computers?

Accepted Answer

The demand for computers will increase.

Question 20

Which of the following best describes the law of supply?

Accepted Answer

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

Microeconomics Chapter 4: Demand, Supply, and Equilibrium - Study Notes

Study Guide - Practice Questions

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