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 demand for coffee is given by $$Q_d = 100 - 5P. If $$the price increases from $$P = 10 to$$ $$P = 12$$, what is the change in quantity demanded?

Accepted Answer

$$Q_d$$ decreases by 10 units

Question 3

Which of the following is NOT a determinant of demand?

Accepted Answer

Production technology

Question 4

If the supply curve for oranges is $$Q_s = 20 + 3P$$ and the demand curve is $$Q_d = 50 - 2P$$, what is the equilibrium price?

Accepted Answer

$$P = 10$$

Question 5

Which of the following statements about utility is correct?

Accepted Answer

Utility is a subjective measure of satisfaction a consumer receives from consuming goods and services.

Question 6

The marginal rate of substitution (MRS) between goods $$X$$ and $$Y is $$defined as:

Accepted Answer

$$MRS = -\frac{\partial U/\partial X}{\partial U/\partial Y}$$

Question 7

If a consumer's indifference curve is convex to the origin, what does this imply about their preferences?

Accepted Answer

The consumer prefers balanced combinations of goods over extremes.

Question 8

Suppose a consumer has a utility function $$U(X, Y) = X$$^{0.5}$$Y^{0.5}. If $$the consumer consumes 4 units of $$X$$ and 9 units of $$Y$, what is their utility?

Accepted Answer

$$U = 6$$

Question 9

Which of the following would cause a movement along the demand curve for pizza?

Accepted Answer

An increase in the price of pizza

Question 10

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

Accepted Answer

It increases

Question 11

A supply curve is typically upward sloping because:

Accepted Answer

Producers are willing to supply more at higher prices due to higher potential profits.

Question 12

If the marginal utility of good $$X is$$ $$MU_X = 10$$ and the marginal utility of good $$Y is$$ $$MU_Y = 5$$, what is the marginal rate of substitution (MRS) of $$X$$ for $$Y$$?

Accepted Answer

$$MRS = 2$$

Question 13

Which of the following best describes a shift in the supply curve?

Accepted Answer

A change in technology or input prices

Question 14

Suppose the utility function is $$U(X, Y) = X + 2Y. $$What is the marginal utility of $$Y$$?

Accepted Answer

$$MU_Y = 2$$

Question 15

If a consumer's budget constraint is $$P_X X + P_Y Y = I$$, which of the following will NOT shift the budget line?

Accepted Answer

A change in consumer preferences

Question 16

Which of the following is true about indifference curves?

Accepted Answer

Indifference curves never cross.

Question 17

If the price of apples falls, which of the following is most likely to occur?

Accepted Answer

There is a movement down the demand curve for apples.

Question 18

Suppose a consumer faces prices $$P_X = 2$$, $$P_Y = 4$$, and has income $$I = 20. $$What is the maximum amount of $$Y$$ the consumer can buy if they buy only $$Y$$?

Accepted Answer

5 units

Question 19

Which of the following best describes the concept of diminishing marginal utility?

Accepted Answer

As a consumer consumes more of a good, the additional satisfaction from each extra unit decreases.

Question 20

If the demand for a good is perfectly inelastic, what does the demand curve look like?

Accepted Answer

A vertical line

Microeconomics Study Notes: Demand, Utility, and Marginal Analysis

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