Practice Questions
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What is consumer surplus in the context of supply and demand interactions?
Consumer surplus is the extra money people save when they pay less than what they are willing to pay. Other options are incorrect because This answer ...
How does an increase in the price of a good typically affect its equilibrium price and the price elasticity of demand for that good, assuming all else is constant?
When the price of a good goes up, the equilibrium price also rises. Other options are incorrect because Some might think that higher prices lead to lo...
What happens to the equilibrium price and quantity of a product when there is an increase in demand and a simultaneous decrease in supply?
When demand goes up, people want more of the product. Other options are incorrect because This option suggests both price and quantity rise; This opti...
How does a decrease in supply, combined with the law of demand, affect the equilibrium price and quantity in a competitive market with high price elasticity of supply?
When supply goes down, there are fewer products available. Other options are incorrect because This option suggests that prices drop when supply decre...
In a competitive market, how does a shift in the demand curve to the right affect the equilibrium price and quantity, assuming the supply curve remains unchanged?
When demand increases, more people want to buy the product. Other options are incorrect because This answer suggests that when demand goes up, the qua...
According to the Law of Demand, if the price of a good decreases, what is likely to happen to the quantity demanded?
When prices go down, people want to buy more of that good. Other options are incorrect because Some might think that lower prices mean less demand, bu...
What does the Law of Supply state about the relationship between price and the quantity of a good that producers are willing to sell?
When prices go up, producers want to sell more. Other options are incorrect because This answer suggests that higher prices lead to less supply; This ...
What does the demand curve represent in economics?
The demand curve shows how much of a product people want to buy at different prices. Other options are incorrect because This option confuses demand w...
If labor costs rise significantly, which outcome is most likely to occur in the market equilibrium?
When labor costs go up, it becomes more expensive for companies to make products. Other options are incorrect because Some might think that higher cos...
Arrange the following steps in the correct order to illustrate how an increase in production costs affects the market equilibrium for a product: A) The supply curve shifts leftward due to increased production costs, B) The market price of the product rises, C) The quantity of the product sold decreases, D) Consumers adjust their purchasing behavior in response to higher prices.
When production costs go up, companies can make less of the product. Other options are incorrect because This option suggests that price changes first...
A sudden increase in the minimum wage law leads to a significant rise in labor costs for a fast-food chain. How would this impact the supply curve for the fast-food market, and what could be the potential consequence on market equilibrium?
When labor costs go up, it costs more for the fast-food chain to make food. Other options are incorrect because Some might think that higher costs wou...
Which of the following factors can lead to a leftward shift in the supply curve for a product? Select all that apply.
Other options are incorrect because Higher labor costs mean it costs more to make products; New technology often helps make products faster or cheaper...
If a significant increase in labor costs leads to a leftward shift in the supply curve, what is the most likely underlying cause of the increased market prices?
When production costs go up, it becomes more expensive for companies to make their products. Other options are incorrect because Some might think that...
If an increase in production costs leads to a decrease in supply, then a decrease in consumer demand leads to what change in the market? A:Increase in price; B:Increase in quantity supplied; C:Decrease in price; D:Decrease in quantity demanded
When people want to buy less, sellers lower prices to attract buyers. Other options are incorrect because Some might think lower demand means higher p...
A new factory opens in a small town, increasing the demand for local labor. As a result, labor costs rise significantly. How would this change affect the supply curve for products manufactured in that factory?
When labor costs go up, it costs more to make products. Other options are incorrect because Some might think higher wages mean more workers and more p...
When production costs increase, the supply curve shifts to the left, leading to a decrease in quantity supplied and an increase in the market price. This phenomenon can be primarily attributed to changes in __________.
When it costs more to make something, producers supply less. Other options are incorrect because Some might think that what people want affects supply...
If labor costs increase, what is the most likely effect on the supply curve?
When labor costs go up, it costs more to make products. Other options are incorrect because Some might think that higher costs mean more supply; It's ...
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