FREE AP Microeconomics Supply and Demand Questions and Answers
If the demand for a product is price elastic, a decrease in price will:
When demand is price elastic, consumers are highly responsive to price changes. A decrease in price leads to a proportionally larger increase in quantity demanded, increasing total revenue.
If the demand for a product is price elastic, a decrease in price will:
When demand is price elastic, consumers are highly responsive to price changes. A decrease in price leads to a proportionally larger increase in quantity demanded, increasing total revenue.
A price ceiling set below the equilibrium price will:
A price ceiling set below equilibrium creates a shortage because the quantity demanded exceeds the quantity supplied at the artificially low price.
Which of the following will shift the demand curve for a normal good to the right?
For a normal good, higher consumer income increases demand, shifting the demand curve to the right. Substitutes and complements affect demand differently.
The cross-price elasticity of demand for two goods is positive. What does this indicate about the relationship between the goods?
A positive cross-price elasticity indicates that when the price of one good rises, the demand for the other good increases, suggesting they are substitutes.