Question 1

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

Accepted Answer

An increase in consumer preferences for environmentally friendly vehicles.

Question 2

Suppose the government imposes a price ceiling on gasoline below the equilibrium price. What is the most likely immediate result?

Accepted Answer

Excess demand (shortage) of gasoline.

Question 3

If the price of a competitor’s shaving cream increases, what happens to the demand curve for Gillette shaving cream?

Accepted Answer

It shifts to the right.

Question 4

Which of the following best describes the concept of 'holding all else equal' (ceteris paribus) in demand analysis?

Accepted Answer

Only the price of the good changes, while all other determinants of demand remain constant.

Question 5

A technological breakthrough reduces the cost of producing solar panels. What is the expected effect on the market for solar panels?

Accepted Answer

The supply curve shifts to the right, decreasing equilibrium price.

Question 6

If both the demand and supply curves for a product shift to the right, what can we say with certainty about the new equilibrium?

Accepted Answer

The equilibrium quantity will increase.

Question 7

During the 1973–1974 oil crisis, the U.S. government capped the price of gasoline. What economic phenomenon did this create?

Accepted Answer

Excess demand (shortage) of gasoline.

Question 8

Which of the following would cause a movement along the supply curve for wheat, rather than a shift of the supply curve?

Accepted Answer

A decrease in the price of wheat.

Question 9

Suppose the price of oil is set at $$80 per barrel, but the competitive equilibrium price is 50 $$per barrel. What will happen in the market?

Accepted Answer

There will be excess supply of oil.

Question 10

If the demand for a good decreases due to a change in consumer preferences, what happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price decreases and equilibrium quantity decreases.

Question 11

Which of the following is NOT a determinant that shifts the supply curve?

Accepted Answer

Buyers’ expectations about the future.

Question 12

A 50% tariff is imposed on imported goods, causing prices to rise. This is best described as:

Accepted Answer

A shift of the supply curve to the left.

Question 13

If the price of shaving gels and foams (substitutes for shaving cream) decreases, what happens to the demand for Gillette shaving cream?

Accepted Answer

The demand curve shifts to the left.

Question 14

Which of the following scenarios best illustrates excess demand?

Accepted Answer

Consumers are unable to purchase as much as they want at the current price.

Question 15

If both the demand curve and the supply curve for oil shift left, what is the certain effect on equilibrium quantity?

Accepted Answer

Equilibrium quantity will decrease.

Question 16

Suppose a major oil exporter suddenly ceases production. What happens in the oil market?

Accepted Answer

The supply curve shifts to the left, causing price to rise.

Question 17

If the price of a normal good increases, holding all else equal, what happens?

Accepted Answer

There is a movement up along the demand curve (quantity demanded decreases).

Question 18

Which of the following best explains why the price of beer does not rise before Super Bowl Sunday, even though demand increases?

Accepted Answer

Beer producers anticipate demand and increase supply, offsetting the price effect.

Question 19

If the demand curve shifts left and the supply curve shifts right simultaneously, what is the certain effect on equilibrium price?

Accepted Answer

Equilibrium price will decrease.

Microeconomics: Demand, Supply, and Equilibrium (Chapter 4, Part 2)

Study Guide - Practice Questions