MICRO ECON EXAM 2025
QUESTIONS WITH 100% VERIFIED
ANSWERS
When quantity demanded decreases in response to a change in price - Answer- there is
a movement from one point to another along the demand curve
Which of the following events can shift the level of demand (demand is the relationship
between price and quantity demanded)? - Answer- Population grows in a particular
market area
If Pepsi goes on sale, what will happen to the demand for Coca-Cola? - Answer-
Demand for Coca-Cola will decrease
According to the law of supply, assuming other factors are held constant - Answer- as
the price of bread increases, the quantity of bread supplied will increase
An increase in the quantity supplied can be the result from - Answer- an increase in
price
Price ceilings typically result in _____ - Answer- Shortages
Price ceilings attempt to make consumer prices ____ - Answer- Lower
Refer to the figure below. If the government set a price ceiling at $10, there would be
a(n): - Answer- shortage of 24 units
Suppose the local government is concerned about the health of local school children,
and for that reason imposes a price ceiling of $3 on yogurt. Based on the graph below,
which of the following is true? - Answer- The quantity demanded will be 5 yogurts.
The quantity supplied will be 3 yogurts.
There will be a shortage of 2 yogurts.
The local government is concerned about poverty so it institutes a minimum wage of $9
per hour. If the demand and supply for labor are given in the graph above, there will be -
Answer- a surplus of 6 workers
A price floor attempts to keep prices ___ - Answer- higher than the equilibrium price
If the government set a price ceiling of $40, there would be: - Answer- 16 units sold
, Supply and demand for bushels of wheat (millions) are shown in the following table. A
$9.00 government mandated price floor would result in: - Answer- an excess supply of 2
million bushels of wheat
A price ceiling creates ________ when it is set ________ the equilibrium price -
Answer- excess demand -- below
How does a price floor set above the equilibrium price affect quantity demanded and
quantity supplied? - Answer- It results in a greater quantity supplied than the quantity
demanded, otherwise known as excess supply
Using the midpoints method, calculate the price elasticity of demand of Good X using
the following information: When the price of good X is $50, the quantity demanded of
good X is 400 units. When the price of good X rises to $60, the quantity demanded of
good X falls to 300 units - Answer- The price elasticity of demand for good X = 1.57
When a 5% increase in income causes a 3% drop in quantity demanded of a good -
Answer- the income elasticity is .6 and the good is an inferior good
Teenage workers are assumed to have ________ labor supply, therefore a 5% increase
in wage would result in ________ percentage change in quantity of labor supplied -
Answer- elastic, greater
You are the manager of a restaurant and would like to increase revenue. The host staff
suggests that you should increase the price of drinks and food, but the servers suggest
decreasing the price of drinks and food. You are unsure if you should increase or
decrease price, but you know that - Answer- the servers thinks demand for drinks and
food is elastic
Suppose you are in charge of sales at a pharmaceutical company, and your firm has a
new drug that causes bald men to grow hair. Assume that the company wants to earn
as much revenue as possible from this drug. If the elasticity of demand for your
company's product at the current price is 1.4, what would you advise the company to
do? - Answer- lower the price
A person who takes life-saving prescription drugs most likely has a(n)
________demand for that drug. Therefore an increase in the price of the drug will result
in ________ total revenue for the drug company - Answer- inelastic; increased
Suppose there is a major technological advance in the production of a good that causes
production costs to fall. If demand for the product is relatively inelastic, what will happen
in the market? - Answer- Price will relatively decrease greater than the increase in
quantity
When income increases and the demand for a good increases, the good is considered a
- Answer- normal good
QUESTIONS WITH 100% VERIFIED
ANSWERS
When quantity demanded decreases in response to a change in price - Answer- there is
a movement from one point to another along the demand curve
Which of the following events can shift the level of demand (demand is the relationship
between price and quantity demanded)? - Answer- Population grows in a particular
market area
If Pepsi goes on sale, what will happen to the demand for Coca-Cola? - Answer-
Demand for Coca-Cola will decrease
According to the law of supply, assuming other factors are held constant - Answer- as
the price of bread increases, the quantity of bread supplied will increase
An increase in the quantity supplied can be the result from - Answer- an increase in
price
Price ceilings typically result in _____ - Answer- Shortages
Price ceilings attempt to make consumer prices ____ - Answer- Lower
Refer to the figure below. If the government set a price ceiling at $10, there would be
a(n): - Answer- shortage of 24 units
Suppose the local government is concerned about the health of local school children,
and for that reason imposes a price ceiling of $3 on yogurt. Based on the graph below,
which of the following is true? - Answer- The quantity demanded will be 5 yogurts.
The quantity supplied will be 3 yogurts.
There will be a shortage of 2 yogurts.
The local government is concerned about poverty so it institutes a minimum wage of $9
per hour. If the demand and supply for labor are given in the graph above, there will be -
Answer- a surplus of 6 workers
A price floor attempts to keep prices ___ - Answer- higher than the equilibrium price
If the government set a price ceiling of $40, there would be: - Answer- 16 units sold
, Supply and demand for bushels of wheat (millions) are shown in the following table. A
$9.00 government mandated price floor would result in: - Answer- an excess supply of 2
million bushels of wheat
A price ceiling creates ________ when it is set ________ the equilibrium price -
Answer- excess demand -- below
How does a price floor set above the equilibrium price affect quantity demanded and
quantity supplied? - Answer- It results in a greater quantity supplied than the quantity
demanded, otherwise known as excess supply
Using the midpoints method, calculate the price elasticity of demand of Good X using
the following information: When the price of good X is $50, the quantity demanded of
good X is 400 units. When the price of good X rises to $60, the quantity demanded of
good X falls to 300 units - Answer- The price elasticity of demand for good X = 1.57
When a 5% increase in income causes a 3% drop in quantity demanded of a good -
Answer- the income elasticity is .6 and the good is an inferior good
Teenage workers are assumed to have ________ labor supply, therefore a 5% increase
in wage would result in ________ percentage change in quantity of labor supplied -
Answer- elastic, greater
You are the manager of a restaurant and would like to increase revenue. The host staff
suggests that you should increase the price of drinks and food, but the servers suggest
decreasing the price of drinks and food. You are unsure if you should increase or
decrease price, but you know that - Answer- the servers thinks demand for drinks and
food is elastic
Suppose you are in charge of sales at a pharmaceutical company, and your firm has a
new drug that causes bald men to grow hair. Assume that the company wants to earn
as much revenue as possible from this drug. If the elasticity of demand for your
company's product at the current price is 1.4, what would you advise the company to
do? - Answer- lower the price
A person who takes life-saving prescription drugs most likely has a(n)
________demand for that drug. Therefore an increase in the price of the drug will result
in ________ total revenue for the drug company - Answer- inelastic; increased
Suppose there is a major technological advance in the production of a good that causes
production costs to fall. If demand for the product is relatively inelastic, what will happen
in the market? - Answer- Price will relatively decrease greater than the increase in
quantity
When income increases and the demand for a good increases, the good is considered a
- Answer- normal good
