Question 1

Which of the following best describes the Law of Demand?

Accepted Answer

When the price of a good rises, the quantity demanded falls.

Question 2

Suppose the price of bubble tea decreases from 50,000 VND to 30,000 VND and Linh’s quantity demanded increases from 8 to 12 cups. This is an example of:

Accepted Answer

A movement along the demand curve.

Question 3

If the price of instant noodles (an inferior good) rises, what is the likely effect on the demand for instant noodles, ceteris paribus?

Accepted Answer

Quantity demanded decreases due to the law of demand.

Question 4

Which of the following events would cause a shift of the demand curve for coffee to the right?

Accepted Answer

A viral social media trend promoting coffee consumption.

Question 5

Given the market demand equations $$Q_d = 1,200 - 20P$$ and market supply $$Q_s = -200 + 50P$$, what is the equilibrium price $$P^*$$?

Accepted Answer

$$P^* = 20$$

Question 6

If the price of gasoline rises, what is the likely effect on the demand for personal motorbikes (a complement)?

Accepted Answer

Demand for motorbikes shifts left.

Question 7

A frost destroys coffee crops in Brazil. What happens to the equilibrium price and quantity in the coffee market?

Accepted Answer

Price rises, quantity falls.

Question 8

Which of the following is a non-price determinant of supply?

Accepted Answer

Input prices.

Question 9

In a perfectly competitive market, which of the following is true?

Accepted Answer

Firms are price takers.

Question 10

If both demand and supply increase simultaneously, what can be said with certainty about the new equilibrium?

Accepted Answer

Equilibrium quantity will rise.

Question 11

Suppose the government introduces a new technology that reduces the cost of producing electric motorbikes by 40%. What is the likely effect on the supply curve?

Accepted Answer

Supply curve shifts to the right.

Question 12

If the market price is set above the equilibrium price, what will occur?

Accepted Answer

A surplus will occur.

Question 13

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

Accepted Answer

As price rises, producers are willing to supply more to increase profit.

Question 14

A sudden viral TikTok trend increases the popularity of bubble tea overnight. What happens to the demand curve for bubble tea?

Accepted Answer

It shifts to the right.

Question 15

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

Accepted Answer

Demand for the original good shifts right.

Question 16

Which of the following is an example of a movement along the supply curve?

Accepted Answer

An increase in the market price of the good.

Question 17

If a market is in equilibrium, which of the following must be true?

Accepted Answer

$$Q_d = Q_s$$

Question 18

A new health warning about sugar causes consumers to reduce bubble tea consumption. What is the likely effect on the equilibrium price and quantity?

Accepted Answer

Price falls, quantity falls.

Question 19

Which of the following best describes the effect of an increase in the number of sellers in a market?

Accepted Answer

Supply curve shifts right.

Study Guide: The Market Forces of Supply and Demand in Microeconomics

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