AP Microeconomics Supply and Demand 1

Question 1

If the demand for a product is price elastic, a decrease in price will:

Accepted Answer

Increase total revenue

Answer

Decrease total revenue

Answer

Have no effect on total revenue

Answer

Reduce the quantity demanded

Question 2

If the demand for a product is price elastic, a decrease in price will:

Accepted Answer

Increase total revenue

Answer

Decrease total revenue

Answer

Have no effect on total revenue

Answer

Reduce the quantity demanded

Question 3

A price ceiling set below the equilibrium price will:

Accepted Answer

Cause a shortage

Answer

Cause a surplus

Answer

Have no effect on the market

Answer

Increase supply

Question 4

Which of the following will shift the demand curve for a normal good to the right?

Accepted Answer

An increase in consumer income

Answer

A decrease in the price of a substitute

Answer

An increase in the price of a complement

Answer

A decrease in consumer preferences for the good

Question 5

The cross-price elasticity of demand for two goods is positive. What does this indicate about the relationship between the goods?

Accepted Answer

They are substitutes

Answer

They are complements

Answer

They are unrelated

Answer

They are inferior goods