Question 1

Suppose the demand for orange juice increases due to a rise in consumer income, assuming orange juice is a normal good. What will happen to the equilibrium price and quantity in the orange juice market?

Accepted Answer

Both the equilibrium price and quantity will increase.

Question 2

If the price of American autos increases, what is the likely effect on the demand curve for European autos in the United States?

Accepted Answer

There will be a rightward shift of the demand curve for European autos.

Question 3

A study finds that meat and poultry prices have a positive impact on the price of fish. What does this indicate about the relationship between fish and meat/poultry?

Accepted Answer

Fish and meat/poultry are substitutes.

Question 4

Given the following demand and supply equations for weezils: 
$$Q_d = 20 - 2P$$ 
$$Q_s = 5 + 3P$$ 
What is the equilibrium price?

Accepted Answer

$$5$$

Question 5

Refer to the previous question. At the equilibrium price, how many weezils are bought and sold?

Accepted Answer

$$15$$

Question 6

If the price of syrup used in soda production increases, what will happen to the supply curve for soda?

Accepted Answer

It will shift from $$S_2 to$$ $$S_1.$$

Question 7

If a country club only allows members to purchase tickets to its celebrity golf tournament, and the demand and supply schedules are as follows: 
At $$P = 20$$, $$Q_d = 400$$, $$Q_s = 600 ($$members only). What will be the equilibrium price?

Accepted Answer

$$10$$

Question 8

If both members and non-members are allowed to purchase tickets to the celebrity golf tournament, and at $$P = 15$$, $$Q_d = 800 ($$members + non-members), $$Q_s = 600$$, what will be the equilibrium price?

Accepted Answer

$$15$$

Question 9

If the price of DVD players decreases, what is the likely effect on the demand for DVDs?

Accepted Answer

The demand curve for DVDs will shift to the right.

Question 10

Suppose the opportunity cost of increasing the production of cookies from 200 dozen to 400 dozen is 300 pounds of coffee. What does this mean?

Accepted Answer

Producing 200 more dozen cookies requires giving up 300 pounds of coffee.

Question 11

If the price of beef rises due to an increase in the price of feed grains used to feed cattle, what is the likely effect in the beef market?

Accepted Answer

The supply of beef would decrease, increasing beef prices.

Question 12

Suppose a decrease in the wage rate paid to workers in the orange juice industry occurs. What will happen to the supply curve for orange juice?

Accepted Answer

It will shift from $$S_1 to$$ $$S_2.$$

Question 13

If the price elasticity of supply of doodads equals $$0.50$$ and the price rises by $$3\%$$, by what percentage will the quantity supplied of doodads rise?

Accepted Answer

$$1.5\%$$

Question 14

If two goods are complements, their cross elasticity of demand will normally be:

Accepted Answer

A negative number.

Question 15

From Figure 6-2, we can infer that demand is ____ between $$P = 12$$ and $$P = 10$$ and ____ between $$P = 6$$ and $$P = 4.$$

Accepted Answer

Elastic; inelastic

Question 16

If a hurricane in Florida knocks out the regional water supply and the demand for bottled water increases sharply, what will happen to the equilibrium price and quantity of bottled water?

Accepted Answer

Price will increase, and quantity will increase.

Question 17

Which of the following would make a point outside the production possibilities frontier (PPF) attainable?

Accepted Answer

An increase in land available for agriculture.

Question 18

If the price of a normal good increases, what will happen to the quantity demanded, ceteris paribus?

Accepted Answer

It will decrease.

Question 19

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

Accepted Answer

Equilibrium price will decrease, and equilibrium quantity will increase.

Microeconomics: Demand, Supply, Market Equilibrium, and Elasticity Study Guide

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