Question 1

If the price of Pepsi increases, what is the most likely effect on the demand for Coke, assuming they are substitute goods?

Accepted Answer

The demand for Coke will increase, shifting the demand curve to the right.

Question 2

If the price of Coke increases, what happens to the quantity demanded for Coke, according to the law of demand?

Accepted Answer

The quantity demanded for Coke decreases.

Question 3

Suppose a new health study finds that drinking Coke is beneficial, leading to an increase in consumer preference. What happens to the demand curve for Coke?

Accepted Answer

The demand curve shifts to the right.

Question 4

If a drought causes a decrease in the supply of sugar, a key input for Coke production, what is the effect on the supply curve for Coke?

Accepted Answer

The supply curve shifts to the left.

Question 5

If the supply of Pepsi increases due to improved production technology, what is the likely effect on the equilibrium price and quantity of Pepsi?

Accepted Answer

Equilibrium price decreases, equilibrium quantity increases.

Question 6

Given the equations $$Q_D = 20 - 2P$$ and $$Q_S = 2P + 8$$, what is the equilibrium price ($$P^*) $$and quantity ($$Q^*$$)?

Accepted Answer

$$P^* = 3, Q^* = 14$$

Question 7

If the market price is set above the equilibrium price, what is the result in the market?

Accepted Answer

A surplus occurs because quantity supplied exceeds quantity demanded.

Question 8

If both demand increases and supply decreases in a market, what is the most likely effect on equilibrium price and quantity?

Accepted Answer

Price increases, quantity may increase, decrease, or stay the same.

Question 9

Suppose the demand for Coke decreases while the supply increases. What is the most likely effect on equilibrium price and quantity?

Accepted Answer

Price decreases, quantity may increase, decrease, or stay the same.

Question 10

If the market price is below the equilibrium price, what is the result?

Accepted Answer

A shortage occurs because quantity demanded exceeds quantity supplied.

Question 11

Given $$Q_D = 100 - 5P$$ and $$Q_S = 5P + 50$$, what is the equilibrium price ($$P^*) $$and quantity ($$Q^*$$)?

Accepted Answer

$$P^* = 5, Q^* = 75$$

Question 12

If the price of Coke increases from $$P_1 to$$ $$P_2$$, which of the following best describes the movement along the demand curve?

Accepted Answer

A movement upward along the demand curve, decreasing quantity demanded.

Question 13

A government imposes a price floor above the equilibrium price for Coke. What is the likely outcome?

Accepted Answer

A surplus of Coke.

Question 14

If the demand for Pepsi decreases due to negative publicity, what happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price and quantity both decrease.

Question 15

Suppose the supply curve for Coke shifts to the right due to lower production costs. What is the effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price decreases, equilibrium quantity increases.

Question 16

If the demand curve for Coke shifts to the left, which of the following is most likely to occur?

Accepted Answer

Equilibrium price and quantity both decrease.

Question 17

A shortage in the market for Pepsi occurs when:

Accepted Answer

Quantity demanded is greater than quantity supplied.

Question 18

If the government sets a price ceiling below the equilibrium price for Coke, what is the likely result?

Accepted Answer

A shortage of Coke.

Question 19

If the price of Coke increases and the quantity supplied increases, what is this an example of?

Accepted Answer

A movement along the supply curve.

Question 20

If the quantity demanded for Coke at $$P = 2 is$$ $$Q_D = 16$$ and the quantity supplied is $$Q_S = 12$$, what is the market condition?

Accepted Answer

There is a shortage of 4 units.

Microeconomics: Market Equilibrium, Demand & Supply, and Price Effects – Step-by-Step Guidance

Study Guide - Practice Questions

Study Guide - Flashcards