Question 1

Which of the following best describes the Law of Demand?

Accepted Answer

As the price of a good increases, the quantity demanded falls, holding all else constant.

Question 2

Suppose the demand for corn is given by $$P = 7 - (1/10)Q. $$What is the quantity demanded when the price is $$P = 3$$?

Accepted Answer

$$Q = 40$$

Question 3

If the price of a substitute good increases, what happens to the demand for the original good?

Accepted Answer

Demand for the original good increases.

Question 4

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

Accepted Answer

A change in the price of the good itself.

Question 5

Given the supply curve $$P = 2 + 2Q$$ and the demand curve $$P = 32 - 3Q$$, what is the equilibrium price?

Accepted Answer

$$P = 14$$

Question 6

If the price of a normal good increases, what is the expected effect on quantity demanded?

Accepted Answer

Quantity demanded decreases.

Question 7

Which of the following is an example of a complement good?

Accepted Answer

Peanut butter and jelly

Question 8

Suppose the cost of production for a good falls due to technological advancement. What happens to the supply curve?

Accepted Answer

The supply curve shifts to the right.

Question 9

If the price of gasoline rises, what is likely to happen in the market for cars?

Accepted Answer

Demand for cars decreases.

Question 10

Which of the following best explains why the supply curve is upward sloping?

Accepted Answer

As price increases, suppliers are willing to supply more due to higher potential profits and increasing costs.

Question 11

If the population in a city increases, what is the expected effect on the demand for apartments?

Accepted Answer

Demand for apartments increases.

Question 12

Suppose the price of inputs used in the production of a good increases. What is the expected effect on supply?

Accepted Answer

Supply decreases.

Question 13

Which of the following is true at market equilibrium?

Accepted Answer

Quantity supplied equals quantity demanded.

Question 14

If a tax is imposed on the production of a good, what is the likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 15

Which of the following would cause a shift in the demand curve for Pepsi?

Accepted Answer

An increase in the price of Coke (a substitute).

Question 16

Suppose the supply schedule for corn is given as follows: at $$P = 1$$, $$Q = 10$$; at $$P = 7$$, $$Q = 70. $$What is the slope of the supply curve?

Accepted Answer

$$\frac{1}{10}$$

Question 17

If the price of a complement good falls, what happens to the demand for the original good?

Accepted Answer

Demand for the original good increases.

Question 18

Which of the following is an example of a shift factor of supply?

Accepted Answer

A change in the price of factors of production.

Question 19

Suppose both the demand and supply curves for a good shift to the right. What happens to the equilibrium quantity?

Accepted Answer

Equilibrium quantity increases.

Question 20

If the price of a good is above equilibrium, what is the likely market outcome?

Accepted Answer

Excess supply (surplus)

Microeconomics Study Guide: Demand, Supply, and Market Equilibrium

Study Guide - Practice Questions