MICROECONOMICS 7TH EDITION BY JEFFREY
M PERLOFF 2026 PRACTICE QUESTIONS AND
ANSWERS TOP REVIEW A+
◉ complements. Answer: two goods that are bought and used
together; inverse relationship
◉ income effect. Answer: if the price goes down for a product, the
purchasing power increases for consumers -- allowing them to
purchase more
◉ law of diminishing marginal utility. Answer: as you consume
anything, the additional satisfaction you receive from each
additional unit will eventually decrease
◉ law of diminishing marginal utility and law of demand. Answer:
the law of diminishing marginal utility causes the inverse
relationship as consumers are willing to pay more for a unit that
offers them the most benefit, while the amount they demand and are
willing to pay for decreases as it does not offer as much utility
◉ market demand. Answer: the demand of the entire population
(add the market - adding the individual demands)
, ◉ 5 shifters of demand. Answer: 1. Tastes and Preferences
2. Number of Consumers
3. Price of Related Goods
4. Income
5. Future Expectations (how will what happens in the future, impact
demand right now)
◉ law of supply. Answer: there is a direct relationship between price
and quantity supplied
◉ supply. Answer: the different quantities of a good that sellers are
willing and able to sell (produce) at different prices
◉ 5 shifters of supply. Answer: 1. Prices/Availability of Inputs
(Resources)
2. Number of Sellers
3. Technology
4. Government Actions (Taxes, Subsidies)
5. Expectations of Future Profit
◉ why doesn't price shift the curve. Answer: changes in price only
cause movement along the curve because demand and supply
addresses the quantities demanded or supplied at different price
points
M PERLOFF 2026 PRACTICE QUESTIONS AND
ANSWERS TOP REVIEW A+
◉ complements. Answer: two goods that are bought and used
together; inverse relationship
◉ income effect. Answer: if the price goes down for a product, the
purchasing power increases for consumers -- allowing them to
purchase more
◉ law of diminishing marginal utility. Answer: as you consume
anything, the additional satisfaction you receive from each
additional unit will eventually decrease
◉ law of diminishing marginal utility and law of demand. Answer:
the law of diminishing marginal utility causes the inverse
relationship as consumers are willing to pay more for a unit that
offers them the most benefit, while the amount they demand and are
willing to pay for decreases as it does not offer as much utility
◉ market demand. Answer: the demand of the entire population
(add the market - adding the individual demands)
, ◉ 5 shifters of demand. Answer: 1. Tastes and Preferences
2. Number of Consumers
3. Price of Related Goods
4. Income
5. Future Expectations (how will what happens in the future, impact
demand right now)
◉ law of supply. Answer: there is a direct relationship between price
and quantity supplied
◉ supply. Answer: the different quantities of a good that sellers are
willing and able to sell (produce) at different prices
◉ 5 shifters of supply. Answer: 1. Prices/Availability of Inputs
(Resources)
2. Number of Sellers
3. Technology
4. Government Actions (Taxes, Subsidies)
5. Expectations of Future Profit
◉ why doesn't price shift the curve. Answer: changes in price only
cause movement along the curve because demand and supply
addresses the quantities demanded or supplied at different price
points
