Mastering Microeconomics: Demand, Supply, and Market Equilibrium Quiz

When the price is set above the equilibrium price, in this case $6, a shortage of 40 units would occur as demand exceeds supply causing an imbalance in the market.

In a market equilibrium, the quantity supplied equals the quantity demanded, leading to stability in prices and the absence of shortage or surplus.

The law of demand states that as the price of a good or service decreases, the quantity demanded for that good or service increases, and vice versa. This is due to consumers being more willing and able to purchase a good or service at a lower price.

The demand curve illustrates the relationship between the price of a product and the quantity of that product that consumers are willing to buy. It shows how the quantity demanded changes as the price of the product changes.

When the price of a good increases, the quantity supplied of that good also increases due to the law of supply, resulting in a direct relationship. On the other hand, when the price of a good increases, the quantity demanded of that good decreases due to the law of demand, resulting in an inverse relationship.

Complementary goods are those that are used together, so a decrease in the price of one will typically lead to an increase in demand for the other as consumers are more likely to purchase both goods when the price of one decreases.

When the price of a close-substitute product increases, the demand for the substitute product will increase, causing the demand curve to shift to the right as consumers switch from the more expensive product to the cheaper substitute.

An increase in money income for an inferior good would lead consumers to shift away from purchasing that good to substitutes, causing the demand curve for the inferior good to shift to the left.

The supply curve specifically displays the relationship between price and the quantity that producers are willing to supply at that price. It does not represent the relationship between demand and quantity supplied, price and quantity demanded, or cost and production output.

When an excise tax is imposed on cigarettes, the cost of production for cigarette manufacturers increases, causing a leftward shift of the supply curve. This leads to a decrease in the quantity of cigarettes supplied at any given price, resulting in a higher equilibrium price for cigarettes.

A government subsidy to producers of a product increases the supply by reducing production costs for the producers, making it more profitable for them to produce and supply more of the product in the market.

When the price is set at $9, it is above the equilibrium price. This would result in a surplus, where the quantity supplied exceeds the quantity demanded, leading to the excess of 20 units in this case.

When the supply decreases in a market, it causes the equilibrium price to go down and equilibrium quantity to increase as there are fewer goods available at a higher price, leading to an increase in demand for the remaining goods.

Economists focus on the relationship between the price of a product and the quantity demanded by consumers, as reflected in the downward-sloping demand curve. Factors like weather conditions, color of the product, or level of competition may influence demand to some extent, but the price of the product itself is considered the primary determinant.

The construction of demand and supply curves primarily revolves around the concept of price, as it determines the quantity of goods produced and purchased in an economy.

DVD players and DVDs are considered complementary goods because the demand for one product is directly related to the demand for the other. In this case, the demand for DVDs increases the demand for DVD players and vice versa.

A decrease in supply is represented by a leftward shift of the supply curve, which is depicted by moving from s2 to s1 on the diagram.

The law of supply states that producers will offer more of a product at higher prices because it becomes more profitable for them to do so.

Equilibrium price refers to the price at which the quantity demanded by consumers is equal to the quantity supplied by producers. In this case, the correct equilibrium price is $2.00 as indicated in the correct answer.

The rationing function of prices is the ability of market prices to allocate scarce resources efficiently by balancing the demand and supply of goods and services.

The market demand curve is derived by adding up the quantities demanded by each individual at each price. This results in a curve that shows the total quantity demanded at different price levels.

The correct answer is 'a change in buyer tastes.' In this scenario, the increase in demand for donuts is most likely due to a shift in consumer preferences and tastes towards donuts.

The correct answer is 'a change in the price of k' because the price of the product directly influences demand. Consumer preferences, introduction of substitutes, and government policies can all affect demand by changing consumer behavior or market conditions.

The correct answer is that bicycles are normal goods because as consumer incomes rise, people are more likely to spend more on normal goods such as bicycles. Inferior goods have an inverse relationship with income, complementary goods are typically used together with another good, and luxury goods are not necessarily impacted by small changes in consumer income.

The demand curve for a product might shift due to various factors such as changes in consumer income, prices of related goods, consumer preferences, population demographics, or marketing strategies.

A leftward shift of a product supply curve indicates a decrease in supply. Some firms leaving an industry would reduce the overall supply available, leading to the leftward shift. An increase in production costs, a decrease in demand for the product, or government subsidies for the industry would not directly cause a leftward shift of the supply curve.

In moving along a stable supply curve, the price of the product for which the supply curve is relevant is not held constant as it determines the quantity of goods or services supplied at each price point. The cost of production, consumer demand, and government regulations can impact the supply curve but are not directly held constant during the movement along it.