Question 1

In the Circular Flow model, which market determines market-based wages?

Accepted Answer

Labour Markets

Question 2

If the demand for Product X is given by $D = 10 - 2P$ and the supply by $S = 3P$, what is the equilibrium price?

Accepted Answer

$P = 1.5$

Question 3

A technological innovation in production will most likely cause:

Accepted Answer

An increase in quantity supplied

Question 4

Which of the following would shift the supply curve for strawberries to the right?

Accepted Answer

An improvement in technology

Question 5

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

Accepted Answer

Demand increases

Question 6

Given the supply curve $S = 2P$ and the demand curve $D = 12 - 2P$, what is the equilibrium quantity?

Accepted Answer

$Q = 8$

Question 7

Which of the following is NOT an exogenous determinant that can shift the demand curve?

Accepted Answer

Price of the good itself

Question 8

If the equilibrium wage in a labour market is determined by $S = 2w$ and $D = 24 - 2w$, what is the equilibrium wage?

Accepted Answer

$w = 6$

Question 9

A decrease in the price of a complement in consumption will tend to:

Accepted Answer

Increase the demand for the original good

Question 10

If the supply curve for a good is $S = 5 + 2P$ and the demand curve is $D = 20 - 3P$, what is the equilibrium price?

Accepted Answer

$P = 2$

Question 11

Which of the following would cause a higher equilibrium price and lower equilibrium quantity?

Accepted Answer

An increase in the price of a complement in production

Question 12

In the Circular Flow, which market determines market-based interest rates?

Accepted Answer

Capital Markets

Question 13

If the price of blueberries rises, which of the following is most likely to occur in the market for strawberries (a substitute in consumption)?

Accepted Answer

Demand for strawberries increases

Question 14

Suppose the demand for apples is $D = 1000 - 50p$ and the supply is $S = 200 + 20p$. What is the equilibrium price?

Accepted Answer

$p = 10$

Question 15

Which of the following would NOT cause an increase in supply?

Accepted Answer

A rise in the price of a substitute in production

Question 16

If the supply curve shifts to the right, what happens to equilibrium price and quantity, all else equal?

Accepted Answer

Price falls, quantity rises

Question 17

Which of the following is a plausible reason for a shift in the labour supply curve to the right?

Accepted Answer

Increase in immigration

Question 18

If the demand curve for a good shifts to the left, what is the likely effect on equilibrium price and quantity?

Accepted Answer

Price falls, quantity falls

Question 19

Which of the following best describes equilibrium in a market?

Accepted Answer

The desired purchases of buyers equal the desired sales of sellers

Question 20

If the demand for a good is $D = 80 - 5p$ and the supply is $S = 5p - 20$, what is the equilibrium price?

Accepted Answer

$p = 10$

Microeconomics Study Notes: The Circular Flow, Markets, and Equilibrium

Study Guide - Practice Questions