Question 1

Which of the following best explains why the individual demand curve for Boba tea is downward sloping?

Accepted Answer

Because of diminishing marginal benefits: each additional Boba tea yields a smaller marginal benefit than the previous one.

Question 2

Suppose James is willing to pay $$7 for his first Boba tea, 6 $$for his second, and $$5 for his third. If the price of Boba tea is 6$$, how many Boba teas will James buy according to the Rational Rule for buyers?

Accepted Answer

2

Question 3

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

Accepted Answer

It shifts to the right.

Question 4

Which equation represents the Rational Rule for buyers?

Accepted Answer

$$MB \geq P$$

Question 5

If a national news show announces that tomato prices will dramatically increase tomorrow, what will happen to the demand for tomatoes today?

Accepted Answer

Demand will shift to the right.

Question 6

Which of the following scenarios would cause a movement along the demand curve rather than a shift?

Accepted Answer

A decrease in the price of the good itself.

Question 7

If income increases, what happens to the demand curve for an inferior good?

Accepted Answer

It shifts to the left.

Question 8

Which of the following is an example of the extensive margin in market demand?

Accepted Answer

New buyers enter the market when the price falls.

Question 9

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

Accepted Answer

Demand for the original good decreases.

Question 10

Which principle is illustrated when James considers the value of Boba tea compared to the next best alternative, such as coffee or pastry?

Accepted Answer

Opportunity cost principle

Question 11

Suppose a new social media platform becomes popular and more people start using it. What effect does this have on the demand curve for the platform?

Accepted Answer

The demand curve shifts to the right.

Question 12

If the price of cookies falls from $$5 to 4$$, and Kate’s marginal benefit for the second cookie is $4, how many cookies will she buy?

Accepted Answer

Two

Question 13

Which of the following would NOT shift the demand curve for gas?

Accepted Answer

A change in the price of gas

Question 14

If the number of buyers in the market increases, what happens to the market demand curve?

Accepted Answer

It shifts to the right.

Question 15

Which of the following best describes a network effect?

Accepted Answer

A good becomes more useful as more people use it.

Question 16

If a good is considered a congestion good, what happens to its demand curve as more people use it?

Accepted Answer

The demand curve shifts to the left.

Question 17

Which of the following is true about movements along the demand curve?

Accepted Answer

They are caused by changes in the price of the good itself.

Question 18

If the price of Uber falls, what is the likely effect on the demand for bus rides?

Accepted Answer

Demand for bus rides decreases.

Question 19

Suppose a bakery starts charging $$4 per cookie instead of 5. $$What does this change represent?

Accepted Answer

A movement along the demand curve.

Question 20

Which of the following would cause the demand curve for a normal good to shift to the right?

Accepted Answer

An increase in consumer income.

Microeconomics Study Notes: Demand, Market Demand, and Demand Shifts

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