#1
Which of the following best describes market equilibrium?
When supply equals demand
ExplanationSupply equals demand in a balanced market.
#2
What will happen in a market if the price is below the equilibrium price?
Excess demand
ExplanationShortage occurs due to higher demand than supply.
#3
Which of the following is a determinant of supply?
Technology
ExplanationAdvancements in technology impact supply.
#4
What happens to the equilibrium price and quantity of pizza if there is a decrease in the price of cheese (a key ingredient)?
Equilibrium price and quantity of pizza increase
ExplanationLower input cost leads to higher supply and lower prices.
#5
Which of the following is a determinant of demand?
Tastes and preferences
ExplanationConsumer preferences influence demand.
#6
What is the effect on the equilibrium price and quantity of coffee if there is a decrease in the price of tea (a substitute)?
Equilibrium price of coffee increases, quantity decreases
ExplanationSubstitution effect: decrease in tea's price reduces coffee's demand.
#7
Which of the following factors does not affect the supply of a product?
Consumer preferences
ExplanationSupply is influenced by production factors, not consumer preferences.
#8
What is the likely effect on the equilibrium price and quantity of strawberries if there is a significant increase in the price of ice cream (a complement)?
Equilibrium price of strawberries decreases, quantity increases
ExplanationDecrease in price and increase in quantity due to substitution effect.
#9
Which of the following is NOT a factor affecting the demand for a product?
Cost of production
ExplanationProduction costs affect supply, not demand.
#10
If the government imposes a price ceiling below the equilibrium price, what is the likely outcome?
Shortage of goods
ExplanationPrice control leads to excess demand.
#11
If there is an increase in consumer income for normal goods, what happens to the demand curve?
Shifts right
ExplanationHigher income increases demand for normal goods.
#12
What happens to the equilibrium price and quantity of bicycles if there is an increase in the price of gasoline (a complementary good)?
Equilibrium price and quantity of bicycles decrease
ExplanationHigher gas prices decrease demand for bicycles.
#13
If the government imposes a tax on producers, what is likely to happen to the equilibrium price and quantity in the market?
Equilibrium price increases, quantity decreases
ExplanationTax increases cost, reducing supply and raising prices.