Q: Which of the following equations represents the law of demand?

$Q_d = f(P)$, \text{ where } Q_d \text{ decreases as } P \text{ increases}$

Question 1

Which of the following best describes a perfectly competitive market?

Accepted Answer

A market with many buyers and many sellers, where each sells an identical product and no one can influence the market price.

Question 2

Suppose the price of ice cream cones increases from $1.00 to $2.00. According to the law of demand, what happens to the quantity demanded?

Accepted Answer

It decreases.

Question 3

If the demand for ramen noodles falls when income rises, ramen noodles are considered:

Accepted Answer

An inferior good.

Question 4

Which of the following events would cause a shift to the right in the demand curve for electric cars?

Accepted Answer

An increase in consumer income, assuming electric cars are normal goods.

Question 5

If the price of baseball bats increases and the demand for baseball gloves decreases, what is the relationship between these two goods?

Accepted Answer

They are complements.

Question 6

Which of the following best describes the law of supply?

Accepted Answer

As the price of a good rises, the quantity supplied of that good rises.

Question 7

A movement along the supply curve is caused by:

Accepted Answer

A change in the price of the good itself.

Question 8

If a hurricane destroys several ice cream factories, what is the likely effect on the supply curve for ice cream?

Accepted Answer

The supply curve shifts to the left.

Question 9

Given the following demand and supply schedules for ice cream cones, what is the equilibrium price?

Price ($) | Quantity Demanded | Quantity Supplied
0.50      | 16                | 0
1.00      | 13                | 1
1.50      | 10                | 4
2.00      | 7                 | 7
2.50      | 4                 | 10
3.00      | 1                 | 13

Accepted Answer

$2.00

Question 10

At a price above the equilibrium price, which of the following will occur in the market?

Accepted Answer

There will be a surplus; quantity supplied exceeds quantity demanded.

Question 11

If the price of pizza increases, what happens to the demand curve for hamburgers, assuming they are substitutes?

Accepted Answer

It shifts to the right.

Question 12

Which of the following is NOT a determinant that can shift the supply curve for a good?

Accepted Answer

A change in the price of the good itself.

Question 13

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

Accepted Answer

The supply curve shifts to the right.

Question 14

If the market price is below the equilibrium price, what will happen?

Accepted Answer

There will be a shortage.

Question 15

Which of the following best describes market demand?

Accepted Answer

The sum of all individual demands at each price.

Question 16

If input prices for making bread increase, what is the likely effect on the supply of bread?

Accepted Answer

Supply decreases.

Question 17

Which of the following equations represents the law of demand?

Accepted Answer

$Q_d = f(P)$, 	ext{ where } Q_d 	ext{ decreases as } P 	ext{ increases}$

Question 18

A shift in the demand curve for a product can be caused by:

Accepted Answer

A change in consumer income.

Question 19

If both demand and supply increase for a product, what happens to equilibrium quantity?

Accepted Answer

It increases.

Question 20

Which of the following statements about equilibrium is correct?

Accepted Answer

At equilibrium, quantity supplied equals quantity demanded.

Microeconomics Study Guide: Markets, Demand, Supply, and Equilibrium

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