AP Microeconomics Practice Test
Original Study Guide - Unit 2: Supply, Demand & Elasticity
1. Law of Demand
The demand curve for a normal good slopes downward for which of the following
reasons?
I. An increase in the price of the good causes consumers to seek alternative products.
II. When price rises, consumers have less purchasing ability for all goods.
III. Higher prices increase the satisfaction consumers receive from that product.
(A) I only
(B) II only
(C) III only
(D) I and II only
(E) I and III only
Answer: D
2. Tax Incidence
The city government levies a $0.50 per unit tax on restaurant meals. Prior to the tax, the
market price was $12.00. After implementation, the price consumers pay is $12.35.
Which statement correctly describes the tax burden?
(A) Restaurants absorb the entire tax burden since the tax was imposed on businesses.
(B) Restaurants and consumers split the tax burden equally.
(C) Consumers bear the larger portion of the tax burden.
(D) Consumers bear no tax burden since they don't pay the tax directly to the
government.
(E) The tax creates no burden on either party since meals are a normal good.
Answer: C
, 3. Price Controls & Shortage
During an unexpected winter storm, suppliers of heating oil reduce available inventory. If
the state government imposes a price ceiling on heating oil, the most likely result would
be:
(A) Heating oil becomes more abundant for consumers.
(B) A shortage of heating oil develops.
(C) The supply curve shifts to the right.
(D) The demand curve shifts to the left.
(E) The market price naturally adjusts without shortage.
Answer: B
4. Shifts in Demand
A decrease in the demand for organic produce, a normal good, could result from:
(A) A rise in consumer incomes.
(B) A rise in the price of organic produce.
(C) A rise in the expected future price of organic produce.
(D) A rise in the price of conventional produce, a substitute.
(E) A rise in the price of fertilizer, a complement to production.
Answer: B
5. Economic Surplus & Market Efficiency
text
Price ($)
15 | Supply
12 | /
9 | /
6 |____/_____ Demand
3 | \
0 |_____\________
0 2 4 6 8 10
Original Study Guide - Unit 2: Supply, Demand & Elasticity
1. Law of Demand
The demand curve for a normal good slopes downward for which of the following
reasons?
I. An increase in the price of the good causes consumers to seek alternative products.
II. When price rises, consumers have less purchasing ability for all goods.
III. Higher prices increase the satisfaction consumers receive from that product.
(A) I only
(B) II only
(C) III only
(D) I and II only
(E) I and III only
Answer: D
2. Tax Incidence
The city government levies a $0.50 per unit tax on restaurant meals. Prior to the tax, the
market price was $12.00. After implementation, the price consumers pay is $12.35.
Which statement correctly describes the tax burden?
(A) Restaurants absorb the entire tax burden since the tax was imposed on businesses.
(B) Restaurants and consumers split the tax burden equally.
(C) Consumers bear the larger portion of the tax burden.
(D) Consumers bear no tax burden since they don't pay the tax directly to the
government.
(E) The tax creates no burden on either party since meals are a normal good.
Answer: C
, 3. Price Controls & Shortage
During an unexpected winter storm, suppliers of heating oil reduce available inventory. If
the state government imposes a price ceiling on heating oil, the most likely result would
be:
(A) Heating oil becomes more abundant for consumers.
(B) A shortage of heating oil develops.
(C) The supply curve shifts to the right.
(D) The demand curve shifts to the left.
(E) The market price naturally adjusts without shortage.
Answer: B
4. Shifts in Demand
A decrease in the demand for organic produce, a normal good, could result from:
(A) A rise in consumer incomes.
(B) A rise in the price of organic produce.
(C) A rise in the expected future price of organic produce.
(D) A rise in the price of conventional produce, a substitute.
(E) A rise in the price of fertilizer, a complement to production.
Answer: B
5. Economic Surplus & Market Efficiency
text
Price ($)
15 | Supply
12 | /
9 | /
6 |____/_____ Demand
3 | \
0 |_____\________
0 2 4 6 8 10
