Question 1

Which of the following best describes the law of demand?

Accepted Answer

As the price of a good increases, the quantity demanded decreases, ceteris paribus.

Question 2

Suppose the price of gasoline falls significantly. What is the likely effect on the demand for pickup trucks, a complementary good?

Accepted Answer

The demand for pickup trucks will increase.

Question 3

Which of the following scenarios represents a shift in the demand curve for ramen noodles?

Accepted Answer

An increase in the number of college students living in the city.

Question 4

If the demand for a good increases due to a rise in consumer income, what type of good is it?

Accepted Answer

Normal good

Question 5

Given the demand equation $$ Q_D = 12 - 2P $$ and the supply equation $$ Q_S = 2P $$, what is the equilibrium price?

Accepted Answer

$$ P = 3 $$

Question 6

Which of the following would cause a movement along the supply curve for wireless earbuds?

Accepted Answer

An increase in the market price of wireless earbuds.

Question 7

If the price of a substitute good (e.g., tea for coffee) decreases, what happens to the demand for coffee?

Accepted Answer

The demand for coffee decreases.

Question 8

A new technology allows toy manufacturers to produce fidget spinners at half the previous cost. What is the likely effect on the market supply curve for fidget spinners?

Accepted Answer

The supply curve shifts to the right.

Question 9

Which of the following best describes a surplus in the market for Tickle Me Elmo toys?

Accepted Answer

Quantity supplied exceeds quantity demanded at the current price.

Question 10

If the government imposes a tax on teddy bear manufacturers, what is the likely effect on the supply curve for teddy bears?

Accepted Answer

The supply curve shifts to the left.

Question 11

Which of the following is an example of a change in quantity supplied, not a change in supply?

Accepted Answer

A decrease in the price of the good itself.

Question 12

Suppose the price of Cup Noodles increases. What is the most likely effect on the quantity demanded, according to the law of demand?

Accepted Answer

Quantity demanded will decrease.

Question 13

If a recession causes incomes to fall, what is the likely effect on the demand for instant noodles (an inferior good)?

Accepted Answer

Demand will increase.

Question 14

Which of the following events would cause the demand curve for wireless earbuds to shift to the right?

Accepted Answer

A government program giving every student a device that uses wireless earbuds.

Question 15

Given the supply equation $$ Q_S = 2P $$ and the demand equation $$ Q_D = 12 - 2P $$, what is the equilibrium quantity?

Accepted Answer

$$ Q = 6 $$

Question 16

If the price of eggs (a complement to bacon) rises, what happens to the demand for bacon?

Accepted Answer

The demand for bacon decreases.

Question 17

A new fad makes Beanie Babies highly desirable. What is the likely effect on the market for Beanie Babies?

Accepted Answer

The demand curve shifts to the right.

Question 18

Which of the following best describes the difference between a change in demand and a change in quantity demanded?

Accepted Answer

A change in demand is a shift of the demand curve; a change in quantity demanded is a movement along the demand curve.

Question 19

If the number of suppliers of ramen noodles increases, what is the likely effect on the market equilibrium?

Accepted Answer

Equilibrium price decreases and equilibrium quantity increases.

Question 20

Suppose the government announces a future ban on fidget spinners. What is the likely effect on current demand?

Accepted Answer

Current demand will increase.

Microeconomics Study Notes: Demand and Supply (Chapter 3)

Study Guide - Practice Questions

Study Guide - Flashcards