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 quantity demanded, while 'quantity demanded' refers to the amount consumers buy at a specific price.

Question 2

Suppose the demand for apples is given by $$ Q_D = 100 - 3p $$ and the supply by $$ Q_S = 20 + 2p . $$What is the equilibrium price?

Accepted Answer

$$ p = 16 $$

Question 3

If the price of pears (a substitute for apples) decreases, what is the likely effect on the demand curve for apples?

Accepted Answer

The demand curve for apples shifts left.

Question 4

Which of the following would cause a movement along the supply curve for wheat, rather than a shift of the curve?

Accepted Answer

A decrease in the price of wheat.

Question 5

If a new cost-saving technology is introduced in apple production, what happens to the supply curve for apples?

Accepted Answer

It shifts to the right.

Question 6

Which of the following best describes market equilibrium?

Accepted Answer

It is the price at which quantity demanded equals quantity supplied.

Question 7

If the government imposes a tax on the production of a good, what is the likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 8

Suppose the absolute price of an apple is $$1 and the absolute price of a mango is 2. $$What is the relative price of an apple in terms of mangoes?

Accepted Answer

$$ 1/2 $$

Question 9

Which of the following is NOT an assumption of a perfectly competitive market?

Accepted Answer

Each producer can influence the market price.

Question 10

If the population with purchasing power increases, what is the likely effect on the demand for most products?

Accepted Answer

Demand curves shift to the right.

Question 11

A decrease in the price of gasoline (a complement to cars) will likely cause:

Accepted Answer

A rightward shift in the demand curve for cars.

Question 12

If the price of oats falls, making oat production less profitable, what is the likely effect on the supply of wheat (a substitute in production)?

Accepted Answer

The supply curve for wheat shifts to the right.

Question 13

Which of the following scenarios describes excess supply in a market?

Accepted Answer

Quantity supplied exceeds quantity demanded at the current price.

Question 14

If all absolute prices in an economy rise by the same amount, what happens to relative prices?

Accepted Answer

Relative prices remain unchanged.

Question 15

Suppose a new subsidy is introduced for apple producers. What is the likely effect on the equilibrium price and quantity of apples?

Accepted Answer

Equilibrium price decreases, equilibrium quantity increases.

Question 16

Which of the following is an example of a shift in the demand curve for winter coats?

Accepted Answer

A change from winter to summer.

Question 17

If the demand for a product increases, what happens to the equilibrium price and quantity, ceteris paribus?

Accepted Answer

Equilibrium price increases, equilibrium quantity increases.

Question 18

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

Accepted Answer

A change in the price of apples.

Question 19

During the COVID-19 pandemic, which of the following best describes the effect on the market for restaurant meals?

Accepted Answer

Demand decreased, shifting the demand curve to the left.

Question 20

Which of the following is a correct statement about the ceteris paribus assumption in demand and supply analysis?

Accepted Answer

It means only the variable of interest is changed, all others are held constant.

Demand, Supply, and Price: Microeconomics Study Guide

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