AP Macroeconomics chapter practice15 questions

05 Supply, Demand, and Market Equilibrium

These questions come directly from the chapter practice in the book. Choose the best answer, check your reasoning, and use the explanation to correct any gap.

Question 1

Question 1 of 15

The price of a good that buyers treat as a substitute for tea rises, with no other change. The demand for tea

A dearer substitute sends buyers toward tea at every tea price, so the whole curve moves right. A reverses the substitution. C and D treat a related good's price as though it were tea's own price, which would produce movement rather than a shift, and B confuses a shift with a change in the curve's slope.
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E. shifts to the right

A dearer substitute sends buyers toward tea at every tea price, so the whole curve moves right. A reverses the substitution. C and D treat a related good's price as though it were tea's own price, which would produce movement rather than a shift, and B confuses a shift with a change in the curve's slope.

Question 2

Question 2 of 15

Which of the following causes the demand curve for restaurant meals to shift to the right?

Higher income raises demand for a normal good at every possible meal price, so the demand curve shifts right. Choice A changes the meal's own price and creates movement along demand. Choice C reduces demand. Choice D makes a substitute cheaper, drawing consumers away from restaurant meals. Choice E raises sellers' costs and shifts supply rather than demand.
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B. An increase in consumers' income when restaurant meals are a normal good

Higher income raises demand for a normal good at every possible meal price, so the demand curve shifts right. Choice A changes the meal's own price and creates movement along demand. Choice C reduces demand. Choice D makes a substitute cheaper, drawing consumers away from restaurant meals. Choice E raises sellers' costs and shifts supply rather than demand.

Question 3

Question 3 of 15

At the current price, consumers demand 900 units each month while firms supply 620 units. What market signal follows?

Quantity demanded exceeds quantity supplied by 900-620=280 units, so the market has a shortage and buyers place upward pressure on price. Choice A reverses the imbalance. Choice B adds the quantities instead of finding their gap. Choice D reports supply alone and reverses the price pressure. Choice E mistakes two unequal positive quantities for equilibrium.
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C. A shortage of 280 units and upward pressure on price

Quantity demanded exceeds quantity supplied by 900-620=280 units, so the market has a shortage and buyers place upward pressure on price. Choice A reverses the imbalance. Choice B adds the quantities instead of finding their gap. Choice D reports supply alone and reverses the price pressure. Choice E mistakes two unequal positive quantities for equilibrium.

Question 4

Question 4 of 15

At a price of 8 the quantity demanded is 40 units and the quantity supplied is 70 units. In a competitive market, price will

Quantity supplied exceeds quantity demanded by 70-40=30 units, and unsold stock pushes sellers to cut the price until the gap closes. A reads a surplus as though it were a shortage. B hands price setting to sellers, when in a competitive market neither side posts it. C denies that an imbalance moves price at all, and E halts the adjustment at today's quantity supplied, which itself shrinks as the price falls.
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D. fall, because 30 units go unsold

Quantity supplied exceeds quantity demanded by 70-40=30 units, and unsold stock pushes sellers to cut the price until the gap closes. A reads a surplus as though it were a shortage. B hands price setting to sellers, when in a competitive market neither side posts it. C denies that an imbalance moves price at all, and E halts the adjustment at today's quantity supplied, which itself shrinks as the price falls.

Question 5

Question 5 of 15

When the prices of the inputs firms use fall, and nothing else changes,

Cheaper inputs make additional output profitable at every price, so the curve moves right. B reverses the direction, C treats a cost change as though it were a price change and produces movement instead of a shift, D relocates the buyers' curve, and E confuses a cost change with a change in how responsive sellers are.
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A. supply shifts right

Cheaper inputs make additional output profitable at every price, so the curve moves right. B reverses the direction, C treats a cost change as though it were a price change and produces movement instead of a shift, D relocates the buyers' curve, and E confuses a cost change with a change in how responsive sellers are.

Question 6

Question 6 of 15

Which of the following shifts the market supply curve for new laptops to the left?

More expensive semiconductor inputs raise laptop production costs, so firms supply fewer laptops at every price and supply shifts left. Choice A changes the good's own price and creates movement along supply. Choices B and E concern buyers and can shift demand. Choice C lowers production costs and shifts supply right.
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D. An increase in the price of semiconductor inputs

More expensive semiconductor inputs raise laptop production costs, so firms supply fewer laptops at every price and supply shifts left. Choice A changes the good's own price and creates movement along supply. Choices B and E concern buyers and can shift demand. Choice C lowers production costs and shifts supply right.

Question 7

Question 7 of 15

Demand in a market is Q_d=100-2P and supply is Q_s=20+2P. The equilibrium price is

Setting 100-2P=20+2P gives 4P=80 and P=20. B divides the 80 gap by a single slope rather than by the sum of the two, C solves 100-2P=0 and reports the price at which demand runs out, D reports the equilibrium quantity of 60 in place of the price, and E adds the two intercepts.
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A. 20

Setting 100-2P=20+2P gives 4P=80 and P=20. B divides the 80 gap by a single slope rather than by the sum of the two, C solves 100-2P=0 and reports the price at which demand runs out, D reports the equilibrium quantity of 60 in place of the price, and E adds the two intercepts.

Question 8

Question 8 of 15

Demand and supply in the same market both increase, and the relative sizes of the two shifts are not given. Which of the following describes the new equilibrium?

Both shifts push quantity up, while their price effects run opposite ways and cannot be ranked without shift sizes. Choices A and C claim the wrong quantity direction, B claims a price result the information does not support, and D denies that anything moved.
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E. Quantity rises and price is indeterminate.

Both shifts push quantity up, while their price effects run opposite ways and cannot be ranked without shift sizes. Choices A and C claim the wrong quantity direction, B claims a price result the information does not support, and D denies that anything moved.

Question 9

Question 9 of 15

Movement along the supply curve for oranges, rather than a shift of that curve, is produced by

The good's own price sits on the vertical axis, so a change in it slides sellers along the curve they already occupy. A and D change production costs, in opposite directions; C changes what a given bundle of resources can yield; and E changes how many sellers there are. Every one of those four relocates the whole curve.
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B. a change in the price of oranges

The good's own price sits on the vertical axis, so a change in it slides sellers along the curve they already occupy. A and D change production costs, in opposite directions; C changes what a given bundle of resources can yield; and E changes how many sellers there are. Every one of those four relocates the whole curve.

Question 10

Question 10 of 15

The market price of a good is above its equilibrium level, so quantity supplied exceeds quantity demanded. Which of the following describes that condition?

Excess supply is a surplus, and it pushes price back down toward equilibrium. Choices A and B name the opposite imbalance, while Choices C and D name possible curve changes rather than the condition described.
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E. A surplus

Excess supply is a surplus, and it pushes price back down toward equilibrium. Choices A and B name the opposite imbalance, while Choices C and D name possible curve changes rather than the condition described.

Question 11

Question 11 of 15

Demand for a normal good shifts to the left. Which of the following changes produces that shift?

For a normal good, less income means less demand at every price. Choices A, D, and E all raise demand, and B changes the own price, which moves buyers along the existing curve.
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C. A fall in buyers' income

For a normal good, less income means less demand at every price. Choices A, D, and E all raise demand, and B changes the own price, which moves buyers along the existing curve.

Question 12

Question 12 of 15

Demand decreases at the same time that supply decreases. Which conclusion is certain without knowing the sizes of the shifts?

A decrease in demand lowers equilibrium quantity, and a decrease in supply also lowers equilibrium quantity, so quantity must fall. Their price effects oppose each other: weaker demand lowers price while weaker supply raises it. Choices A and E assert one of those competing price directions, Choice C assumes equal shifts, and Choice B reverses the quantity result.
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D. Equilibrium quantity decreases.

A decrease in demand lowers equilibrium quantity, and a decrease in supply also lowers equilibrium quantity, so quantity must fall. Their price effects oppose each other: weaker demand lowers price while weaker supply raises it. Choices A and E assert one of those competing price directions, Choice C assumes equal shifts, and Choice B reverses the quantity result.

Question 13

Question 13 of 15

If growers come to expect a much higher price for coffee next month, the current supply of coffee will

If a better price is coming, holding output back and selling later pays, so less is offered today at every current price and the curve moves left. B reverses that incentive. C leaves expectations out of the supply determinants, D confuses a shift with a change in the curve's slope, and E treats a determinant off the axes as though it produced movement along the curve.
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A. shift left as sellers hold back output

If a better price is coming, holding output back and selling later pays, so less is offered today at every current price and the curve moves left. B reverses that incentive. C leaves expectations out of the supply determinants, D confuses a shift with a change in the curve's slope, and E treats a determinant off the axes as though it produced movement along the curve.

Question 14

Question 14 of 15

In a single market, demand decreases while supply increases. Which of the following conclusions follows without knowing the relative sizes of the two shifts?

Weaker demand and stronger supply both push price down, so the price direction is settled. Their quantity effects run opposite ways, which is why A, C, and D claim more than the shifts establish, and E assumes an offset the information does not provide.
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B. Equilibrium price falls, while the change in quantity is indeterminate.

Weaker demand and stronger supply both push price down, so the price direction is settled. Their quantity effects run opposite ways, which is why A, C, and D claim more than the shifts establish, and E assumes an offset the information does not provide.

Question 15

Question 15 of 15

Demand is Q_d=84-2P and supply is Q_s=12+4P. What is the equilibrium quantity?

Set demand equal to supply: 84-2P=12+4P, so 72=6P and P=12. Substituting gives Q=84-24=60 units. Choice A reports the equilibrium price, Choice B subtracts the two slopes, Choice D reports the intercept gap, and Choice E reports the demand intercept.
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C. 60 units

Set demand equal to supply: 84-2P=12+4P, so 72=6P and P=12. Substituting gives Q=84-24=60 units. Choice A reports the equilibrium price, Choice B subtracts the two slopes, Choice D reports the intercept gap, and Choice E reports the demand intercept.

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