1.

The “law of demand” states that changes in:

Correct answer:
a) The quantity demanded of a good is inversely related to changes in its price.

2. The “law of supply” states that, other things remaining the same:
Correct answer:
a) Firms will produce more of a good the higher its price.

3. When the price of a pizza decreases from 12 € to 10 €:

Correct answer:
b) More pizza will be demanded (movement along the demand curve).

4. In a perfectly competitive market:

Correct answer:
a) The goods and services traded are homogeneous.

5. In an oligopoly market:
Correct answer:
d) There is not always aggressive competition.

6. In a competitive monopoly.
Correct answer:
d) None of the above are correct.

7. This will NOT produce a shift in the supply curve:

Correct answer:
c) Prices.

8. An increase in the number of buyers will:

Correct answer:
d) Shift the demand curve to the righ

9. The equilibrium in markets:

Correct answer:
c) At the equilibrium price, consumers buy everything they want and can buy, and producers
sells everything they want and can sell.

10. The cross-price elasticity of demand:

Correct answer:
b) Indicates the percentage variation that experiments the quantity demanded of one good
when the price of another good increments in 1 percent.

11. Suppose Frosty Pops cereal is an inferior good. An increase in income:

Correct answer:
a) Leads to a decrease in the demand for Frosty Pops.

12. A perfectly inelastic supply is when:

Correct answer:
a) The price elasticity of supply equals 0, so the quantity supplied does not change when the
price changes

13. If the income elasticity of demand is negative, it means that:

Correct answer:
a) When the income increases, the demand for the good decreases. These are known as
inferior goods.

14. If the income elasticity of demand is positive, it means that:

Correct answer:
c) When the income increases, the demand for the good increases. These are known as
normal goods

15. When demand and supply curves both shift rightward, which of the following
happens?
Correct answer:
c) The equilibrium price falls, and the equilibrium quantity increases.

16. The correct mathematical form of the income elasticity of demand is:
Correct answer:
b) 𝜀𝑝 = 𝜕𝑄/𝜕𝑃 · 𝑃 /Q

17. A shortage is when:

Correct answer:
a) The price is less than the equilibrium price P*, producers will be willing to sell more than
the equilibrium quantity Q*, while consumers will want to buy less.

18. Bicycles are made out of steel. If the price of steel increases, there is a shift in the
supply curve of bicycles that leads to:
Correct answer:
b) An increase in the price of a bicycle

21. Draw a perfectly elastic supply in the price-quantity (P, Q) space:

22. Draw a perfectly inelastic demand in the price-quantity (P, Q) space