#1
Which of the following will cause an increase in the demand for a product?
A decrease in the price of the product
ExplanationPrice decrease leads to higher demand.
#2
In a market where supply and demand are in equilibrium, what is true?
There is no shortage or surplus
ExplanationSupply matches demand, no excess.
#3
Which of the following is NOT a factor that can shift the demand curve?
Changes in technology
ExplanationTechnology affects supply, not demand.
#4
What is the law of demand?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and demand.
#5
If the supply of a product decreases while demand remains constant, what will happen to the equilibrium price and quantity?
Price will increase and quantity will decrease
ExplanationLess supply results in higher prices and lower quantity.
#6
What is the likely effect on the market for gasoline if a new technology greatly improves fuel efficiency in cars?
Decrease in demand and increase in supply
ExplanationLess demand due to efficiency, more supply.
#7
What happens to the equilibrium price and quantity if both demand and supply increase?
Price and quantity both increase
ExplanationMore demand and supply push both up.
#8
What does a price ceiling set below the equilibrium price cause in a market?
A shortage
ExplanationExcess demand due to low price.
#9
Which of the following is a determinant of supply?
Technology
ExplanationTechnology impacts production.
#10
When does a market reach allocative efficiency?
When the marginal benefit equals the marginal cost
ExplanationOptimal allocation of resources.
#11
If the demand for a good is inelastic and the price increases, what happens to total revenue?
Increases
ExplanationPrice increase compensates for lower demand.
#12
What effect will an increase in the price of a substitute good have on the demand for the original good?
Decrease in demand
ExplanationSubstitutes become less attractive.