Question 1

Which of the following best describes the difference between 'demand' and 'quantity demanded'?

Accepted Answer

Demand refers to the entire relationship between price and the quantity people are willing to buy, while quantity demanded refers to a specific amount at a specific price.

Question 2

Suppose the price of coffee increases. According to the law of demand, what will happen to the quantity demanded of coffee, ceteris paribus?

Accepted Answer

The quantity demanded will decrease.

Question 3

Which of the following would cause a shift of the demand curve for new cars to the right?

Accepted Answer

An increase in consumer incomes, assuming new cars are normal goods.

Question 4

If the demand for ramen noodles decreases as income rises, ramen noodles are considered:

Accepted Answer

Inferior goods.

Question 5

Which of the following is an example of substitute goods?

Accepted Answer

Butter and margarine.

Question 6

What causes a movement along the supply curve?

Accepted Answer

A change in the price of the good itself.

Question 7

Suppose the supply curve for wheat shifts to the left. Which of the following could explain this shift?

Accepted Answer

An increase in the cost of fertilizer.

Question 8

The law of supply states that, ceteris paribus:

Accepted Answer

As the price of a good increases, the quantity supplied increases.

Question 9

Why does the supply curve typically slope upward?

Accepted Answer

Because higher prices provide an incentive for producers to supply more.

Question 10

If both the demand and supply curves for a product shift to the right, what can be said about the new equilibrium?

Accepted Answer

Equilibrium quantity will increase, but the change in equilibrium price is ambiguous.

Question 11

Given the following demand and supply equations for a market: $$Q_D = 100 - 2P$$ and $$Q_S = 20 + 3P$$, what is the equilibrium price?

Accepted Answer

$$P = 16$$

Question 12

A surplus occurs in a market when:

Accepted Answer

Quantity supplied exceeds quantity demanded at the current price.

Question 13

Which of the following would NOT cause a shift in the demand curve for pizza?

Accepted Answer

A decrease in the price of pizza.

Question 14

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

Accepted Answer

Demand decreases.

Question 15

Which of the following is a determinant of supply?

Accepted Answer

The cost of inputs.

Question 16

Suppose the market for electric cars is in equilibrium. If a new technology reduces production costs, what will happen to the equilibrium price and quantity?

Accepted Answer

Equilibrium price will decrease and equilibrium quantity will increase.

Question 17

Which of the following best describes a 'change in quantity supplied'?

Accepted Answer

A movement along the supply curve due to a change in the price of the good.

Question 18

If the supply of oranges decreases while demand remains unchanged, what will happen to the equilibrium price and quantity?

Accepted Answer

Equilibrium price will rise and equilibrium quantity will fall.

Question 19

Which of the following statements is true regarding 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, while a change in quantity demanded is a movement along the demand curve.

Question 20

Suppose the government imposes a price ceiling below the equilibrium price in the market for apartments. What is the likely result?

Accepted Answer

A shortage of apartments.

Supply and Demand: Core Concepts and Applications

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