#1
What happens to the equilibrium price and quantity when demand increases?
Equilibrium price increases; equilibrium quantity increases
Equilibrium price decreases; equilibrium quantity decreases
Equilibrium price increases; equilibrium quantity decreases
Equilibrium price decreases; equilibrium quantity increases
#2
What causes a shift in the supply curve?
Changes in consumer preferences
Changes in input prices
Changes in the price of substitutes
Changes in income levels
#3
Which of the following is NOT a determinant of demand?
Consumer preferences
Income levels
Price of substitutes
Cost of production
#4
What does the price elasticity of demand measure?
The responsiveness of quantity demanded to changes in price
The percentage change in quantity demanded relative to the percentage change in income
The change in quantity demanded relative to the change in consumer preferences
The change in quantity demanded relative to the change in the price of substitutes
#5
What is the main reason for the law of demand?
Substitution effect
Income effect
Diminishing marginal utility
Consumer expectations
#6
Which of the following would likely increase the equilibrium quantity of a good?
An increase in the price of complementary goods
A decrease in the price of substitute goods
An increase in the price of the good
A decrease in consumer income
#7
What is the likely effect of a decrease in both supply and demand on equilibrium price and quantity?
Equilibrium price decreases; equilibrium quantity decreases
Equilibrium price increases; equilibrium quantity decreases
Equilibrium price decreases; equilibrium quantity increases
Equilibrium price increases; equilibrium quantity increases
#8
What is the effect of an increase in both supply and demand on equilibrium quantity?
Equilibrium quantity increases
Equilibrium quantity decreases
Equilibrium quantity remains unchanged
Equilibrium quantity may increase or decrease depending on the magnitude of the changes
#9
What happens to equilibrium price and quantity when supply decreases and demand increases?
Equilibrium price decreases; equilibrium quantity increases
Equilibrium price increases; equilibrium quantity decreases
Equilibrium price increases; equilibrium quantity may increase or decrease
Equilibrium price decreases; equilibrium quantity remains unchanged
#10
If the price elasticity of supply for a good is greater than 1, the supply curve is:
Perfectly inelastic
Relatively inelastic
Unit elastic
Relatively elastic
#11
If the price of a good is above the equilibrium price, what is likely to happen?
There will be a surplus, causing the price to decrease
There will be a shortage, causing the price to increase
There will be no effect on the market
The quantity demanded will increase
#12
If the demand for a good is perfectly elastic, what does this imply?
Consumers are not responsive to price changes
Any increase in price will lead to zero quantity demanded
Price changes have no effect on quantity demanded
Quantity demanded changes proportionally more than the price change
#13
When supply and demand are both elastic and a tax is imposed on the good, who bears more of the burden of the tax?
Consumers
Producers
It is shared equally between consumers and producers
None of the above
#14
What happens to equilibrium price and quantity when both supply and demand decrease?
Equilibrium price decreases; equilibrium quantity may increase or decrease
Equilibrium price decreases; equilibrium quantity increases
Equilibrium price increases; equilibrium quantity decreases
Equilibrium price decreases; equilibrium quantity remains unchanged
#15
If a price floor is set above the equilibrium price, what is the likely outcome?
A surplus of the good
A shortage of the good
No effect on the market
A decrease in demand for the good