Question 1

Suppose the market for bicycles is in equilibrium. Suddenly, a new health trend increases the popularity of cycling. What is the most likely immediate effect on the market equilibrium?

Accepted Answer

The demand curve shifts to the right, causing the equilibrium price and quantity to increase.

Question 2

Which of the following best describes market equilibrium?

Accepted Answer

It is the point where $$Q_s = Q_d$$ and there is no pressure for price to change.

Question 3

If the price of tea (a substitute for coffee) increases, what is the expected effect on the demand for coffee?

Accepted Answer

The demand for coffee will increase, shifting the demand curve to the right.

Question 4

A surplus occurs in a market when:

Accepted Answer

$$Q_s \u003e Q_d at $$the current price, leading to downward pressure on price.

Question 5

Which of the following is NOT a demand shifter?

Accepted Answer

A change in the price of the good itself.

Question 6

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

Accepted Answer

The demand for the original good decreases, shifting the demand curve to the left.

Question 7

Suppose the income of consumers increases and the good in question is an inferior good. What is the expected effect on demand?

Accepted Answer

Demand will decrease, shifting the demand curve to the left.

Question 8

Which of the following equations represents the condition for market equilibrium?

Accepted Answer

$$Q_s = Q_d$$

Question 9

A shortage in a market is most likely to result in which of the following?

Accepted Answer

Upward pressure on price as consumers compete for limited goods.

Question 10

If the population of a city increases, what is the likely effect on the demand for normal goods?

Accepted Answer

Demand for normal goods will increase, shifting the demand curve to the right.

Question 11

Which of the following best describes the effect of a leftward shift in the demand curve?

Accepted Answer

At every price, the quantity demanded is lower than before.

Question 12

If a new technology reduces the cost of producing smartphones, what is the likely effect on the market?

Accepted Answer

The supply curve shifts to the right, leading to a lower equilibrium price and higher equilibrium quantity.

Question 13

Which of the following is an example of a demographic demand shifter?

Accepted Answer

A change in the age distribution of the population.

Question 14

If the price of a normal good increases, what is the expected effect on the quantity demanded, ceteris paribus?

Accepted Answer

The quantity demanded will decrease, moving along the demand curve.

Question 15

Suppose the government imposes a price ceiling below the equilibrium price. What is the most likely outcome?

Accepted Answer

A shortage, as quantity demanded exceeds quantity supplied.

Question 16

Which of the following best explains why firms compete by lowering prices during a surplus?

Accepted Answer

To sell excess inventory, firms lower prices, which increases quantity demanded and reduces the surplus.

Question 17

If the price of a good is above the equilibrium price, what will happen in the market?

Accepted Answer

A surplus will occur, putting downward pressure on the price.

Question 18

Which of the following is true about the relationship between normal and inferior goods and income?

Accepted Answer

For normal goods, demand increases as income increases; for inferior goods, demand decreases as income increases.

Question 19

A rightward shift in the supply curve, with demand held constant, will result in:

Accepted Answer

A lower equilibrium price and a higher equilibrium quantity.

Question 20

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

Accepted Answer

The equilibrium quantity will increase.

Market Equilibrium, Demand and Supply Shifters in Microeconomics

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