ECON 300 EXAM 1 | 122 QUESTIONS AND
CORRECT ANSWERS WITH COMPLETE
SOLUTION | NEW 2026 UPDATE
When demand increases: - ANSWERS the demand curve shifts to the right.
What will not cause demand for apples to increase or decrease? - ANSWERS a
reduction in the price of apples
If the price of crude oil increases and the number of people who own cars falls: -
ANSWERS the equilibrium price of gasoline will be uncertain and equilibrium
quantity of gasoline will decrease.
If the price of crude oil decreases: - ANSWERS the equilibrium price of
gasoline will decrease and equilibrium quantity of gasoline will increase.
If the supply curve is QS = 4P − 4, then the highest price at which no producer is
willing to sell the good (i.e. the supply choke price) is: - ANSWERS 1.
If the demand curve is QD = 10 − 2P, then the lowest price at which no consumer
is willing to buy the good (i.e., the demand choke price) is: - ANSWERS 5.
When the prevailing price is above the price where supply intersects demand: -
ANSWERS price falls because there is a surplus, so producers cut prices to try
to attract buyers.
,Which of the following would cause an increase in the quantity demanded of
pizza? - ANSWERS an increase in the supply of pizza
If demand increases and supply increases: - ANSWERS equilibrium price will
be uncertain and equilibrium quantity will increase.
If supply decreases: - ANSWERS equilibrium price increases and equilibrium
quantity decreases.
If supply increases and demand decreases: - ANSWERS equilibrium price will
decrease and equilibrium quantity will be uncertain.
If demand decreases: - ANSWERS equilibrium price decreases and equilibrium
quantity decreases.
If the inverse demand curve is P = 12 − 2QD and the inverse supply curve is P =
4QS, then the equilibrium price and quantity are: - ANSWERS Pe = 8; Qe = 2.
A decrease in supply: - ANSWERS creates excess demand, causing equilibrium
price to increase.
A decrease in demand: - ANSWERS produces excess supply, causing
equilibrium price to decrease.
, The impact of an increase in demand on equilibrium price will be bigger when: -
ANSWERS supply is steeper.
When the prevailing price is below the price where supply intersects demand: -
ANSWERS price rises because a shortage, so buyers bid up the price.
If the cross-price elasticity between two goods is positive, then the goods are: -
ANSWERS substitutes.
If the income elasticity of a good is positive, then the good is: - ANSWERS
normal.
If the absolute value of the price elasticity of demand is 2, then demand is: -
ANSWERS elastic.
The price elasticity of demand of a good whose demand curve is linear with a
slope of −4: - ANSWERS decreases as quantity increases.
The demand curve of a good is QD = 10 −2P. When P = 5, demand is: -
ANSWERS perfectly inelastic.
When demand and supply are linear, consumer surplus is equal to: - ANSWERS
The area between the demand curve and the price, out to the quantity that is
exchanged.
CORRECT ANSWERS WITH COMPLETE
SOLUTION | NEW 2026 UPDATE
When demand increases: - ANSWERS the demand curve shifts to the right.
What will not cause demand for apples to increase or decrease? - ANSWERS a
reduction in the price of apples
If the price of crude oil increases and the number of people who own cars falls: -
ANSWERS the equilibrium price of gasoline will be uncertain and equilibrium
quantity of gasoline will decrease.
If the price of crude oil decreases: - ANSWERS the equilibrium price of
gasoline will decrease and equilibrium quantity of gasoline will increase.
If the supply curve is QS = 4P − 4, then the highest price at which no producer is
willing to sell the good (i.e. the supply choke price) is: - ANSWERS 1.
If the demand curve is QD = 10 − 2P, then the lowest price at which no consumer
is willing to buy the good (i.e., the demand choke price) is: - ANSWERS 5.
When the prevailing price is above the price where supply intersects demand: -
ANSWERS price falls because there is a surplus, so producers cut prices to try
to attract buyers.
,Which of the following would cause an increase in the quantity demanded of
pizza? - ANSWERS an increase in the supply of pizza
If demand increases and supply increases: - ANSWERS equilibrium price will
be uncertain and equilibrium quantity will increase.
If supply decreases: - ANSWERS equilibrium price increases and equilibrium
quantity decreases.
If supply increases and demand decreases: - ANSWERS equilibrium price will
decrease and equilibrium quantity will be uncertain.
If demand decreases: - ANSWERS equilibrium price decreases and equilibrium
quantity decreases.
If the inverse demand curve is P = 12 − 2QD and the inverse supply curve is P =
4QS, then the equilibrium price and quantity are: - ANSWERS Pe = 8; Qe = 2.
A decrease in supply: - ANSWERS creates excess demand, causing equilibrium
price to increase.
A decrease in demand: - ANSWERS produces excess supply, causing
equilibrium price to decrease.
, The impact of an increase in demand on equilibrium price will be bigger when: -
ANSWERS supply is steeper.
When the prevailing price is below the price where supply intersects demand: -
ANSWERS price rises because a shortage, so buyers bid up the price.
If the cross-price elasticity between two goods is positive, then the goods are: -
ANSWERS substitutes.
If the income elasticity of a good is positive, then the good is: - ANSWERS
normal.
If the absolute value of the price elasticity of demand is 2, then demand is: -
ANSWERS elastic.
The price elasticity of demand of a good whose demand curve is linear with a
slope of −4: - ANSWERS decreases as quantity increases.
The demand curve of a good is QD = 10 −2P. When P = 5, demand is: -
ANSWERS perfectly inelastic.
When demand and supply are linear, consumer surplus is equal to: - ANSWERS
The area between the demand curve and the price, out to the quantity that is
exchanged.
