Question 1

Which of the following is NOT a characteristic of a perfectly competitive market?

Accepted Answer

Sellers can influence the market price by adjusting their output.

Question 2

Suppose the market for wheat is perfectly competitive. If the market price is $10 per bushel, what is the marginal revenue for a wheat farmer selling an additional bushel?

Accepted Answer

$10

Question 3

If the price of gasoline increases significantly, which of the following is most likely to occur according to the law of demand?

Accepted Answer

The quantity of gasoline demanded will decrease.

Question 4

Which of the following would cause a shift (not a movement) in the demand curve for electric cars?

Accepted Answer

A change in consumer preferences toward environmentally friendly vehicles.

Question 5

In the context of market supply, what does the supply curve represent?

Accepted Answer

The quantity of a good that sellers are willing to supply at each possible price.

Question 6

If the market price is set above the equilibrium price, what will be the result in the market?

Accepted Answer

There will be excess supply (a surplus).

Question 7

Suppose the supply curve for oil shifts to the left due to a major producer cutting output. What is the most likely effect on equilibrium price and quantity?

Accepted Answer

Equilibrium price will rise and equilibrium quantity will fall.

Question 8

Which of the following best describes a movement along the demand curve?

Accepted Answer

A change in the quantity demanded due to a change in the good's own price.

Question 9

If Camilla is willing to pay 20 NOK for the 200th liter of petrol, what is her marginal benefit for that liter?

Accepted Answer

$$20$$

Question 10

Which of the following is an example of a commodity market that closely fits the perfectly competitive model?

Accepted Answer

The global market for soybeans.

Question 11

Suppose the market demand for a good is given by $$Q_D = 100 - 2P$$ and the market supply is $$Q_S = 4P. $$What is the equilibrium price?

Accepted Answer

$$P = 16.67$$

Question 12

If both the demand and supply curves for oil shift to the left, but the demand shift is larger than the supply shift, what happens to the equilibrium price and quantity?

Accepted Answer

Equilibrium price falls and equilibrium quantity falls.

Question 13

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

Accepted Answer

A decrease in the price of steel itself.

Question 14

If the marginal cost of producing the 1.5 billionth barrel of oil is $$100, what does this mean for a profit-maximizing firm in a perfectly competitive market where the price is 100$$?

Accepted Answer

The firm is maximizing profit at this output level.

Question 15

Which of the following best explains why the demand curve is downward sloping?

Accepted Answer

As price decreases, the marginal benefit of additional units to consumers decreases, so they are willing to buy more.

Question 16

Suppose a new environmental regulation increases the cost of producing gasoline. What is the most likely effect on the supply curve?

Accepted Answer

The supply curve shifts to the left.

Question 17

If the market for tomatoes is in equilibrium and a sudden frost destroys half the crop, what is the most likely immediate effect?

Accepted Answer

The equilibrium price will rise and the equilibrium quantity will fall.

Question 18

Which of the following is an example of a movement along the supply curve?

Accepted Answer

An increase in the price of the good itself.

Question 19

If the price of a substitute good increases, what is the likely effect on the demand for the original good?

Accepted Answer

The demand for the original good will increase.

Question 20

Suppose the market demand for a product is the sum of the individual demands of two consumers, given by $$Q_{D1} = 50 - P$$ and $$Q_{D2} = 30 - 2P. $$What is the market demand function?

Accepted Answer

$$Q_D = 80 - 3P$$

Principles of Microeconomics: Markets, Demand, and Supply

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