Question 1

Which of the following best describes the law of demand as illustrated in the first image?

Accepted Answer

As the price of natural gas rises, the quantity demanded falls.

Question 2

Based on the demand schedule for natural gas, what is the quantity demanded when the price is $3.00 per BTU?

Accepted Answer

$$9.4$$ trillion BTUs

Question 3

According to the supply schedule, what happens to the quantity supplied when the price increases from $$2.75 to$$ $$3.50$$ per BTU?

Accepted Answer

It increases from $$9.1 to$$ $$11.5$$ trillion BTUs.

Question 4

If the market price of natural gas is set at $$3.75$$ per BTU, what is the resulting market condition?

Accepted Answer

There is a surplus, as quantity supplied exceeds quantity demanded.

Question 5

Using the data from the images, at what price does the market for natural gas reach equilibrium?

Accepted Answer

$$3.25$$ per BTU

Question 6

At equilibrium, what is the quantity of natural gas bought and sold?

Accepted Answer

$$11.2$$ trillion BTUs

Question 7

Suppose a new technology reduces the cost of producing natural gas. Which curve shifts and what is the likely effect on equilibrium price and quantity?

Accepted Answer

The supply curve shifts right; equilibrium price falls and quantity rises.

Question 8

If the price of a substitute for natural gas (such as heating oil) increases, what is the expected effect on the demand for natural gas?

Accepted Answer

Demand for natural gas increases, shifting the demand curve right.

Question 9

If the government imposes a price ceiling below the equilibrium price for natural gas, what is the likely market outcome?

Accepted Answer

A shortage of natural gas.

Question 10

Which of the following would NOT cause a shift in the supply curve for natural gas?

Accepted Answer

A change in the price of natural gas.

Question 11

Suppose the demand function for natural gas is $$Q_d = 20 - 2P$$ and the supply function is $$Q_s = 4P - 8. $$Find the equilibrium price.

Accepted Answer

$$P = 4$$

Question 12

Given the demand function $$Q_d = 20 - 2P$$ and the supply function $$Q_s = 4P - 8$$, what is the equilibrium quantity?

Accepted Answer

$$Q = 12$$

Question 13

If a severe winter increases the demand for natural gas, what happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price rises, equilibrium quantity rises.

Question 14

Which of the following is an example of a movement along the demand curve for natural gas?

Accepted Answer

A decrease in the price of natural gas causes quantity demanded to increase.

Question 15

If the number of consumers in the market for natural gas increases, what is the likely effect?

Accepted Answer

The demand curve shifts right, increasing equilibrium price and quantity.

Question 16

Suppose input prices for natural gas production rise. What is the likely effect on the supply curve?

Accepted Answer

The supply curve shifts left, raising equilibrium price and lowering equilibrium quantity.

Question 17

If consumers expect the price of natural gas to rise in the future, what is the likely immediate effect on the current demand?

Accepted Answer

Current demand increases, shifting the demand curve right.

Question 18

Which of the following best explains why a surplus occurs when the price is above equilibrium?

Accepted Answer

Quantity supplied exceeds quantity demanded, leading producers to lower prices.

Question 19

If the price of a complementary good (such as gas stoves) falls, what is the likely effect on the demand for natural gas?

Accepted Answer

Demand for natural gas increases, shifting the demand curve right.

Question 20

Which of the following scenarios would cause both the equilibrium price and quantity of natural gas to fall?

Accepted Answer

A decrease in demand for natural gas.

Supply, Demand, and Market Equilibrium: Microeconomics Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards