AP Microeconomics Unit 2 Practice Test & Exam | 22 Questions

Questions 1-3 refer to the graph below, which shows the market for coffee.

1. Based on the graph, which of the following statements is true at the market-clearing price?

(A)The quantity demanded is 15 million pounds.(B)The quantity supplied is greater than the quantity demanded, resulting in a surplus.(C)The market clears at a price of $10, where the quantity demanded equals the quantity supplied.(D)Consumer surplus is zero because all consumers pay the equilibrium price.

2. At the market equilibrium, what is the value of the total producer surplus?

(A)$75(B)$150(C)$225(D)$300

3. Suppose a new study is published proving that coffee consumption significantly improves long-term health. How would this event affect the coffee market shown in the graph?

(A)The supply curve would shift right, leading to a lower price and higher quantity.(B)The demand curve would shift right, leading to a higher price and higher quantity.(C)The quantity demanded would increase, causing a movement down along the demand curve.(D)The demand curve would shift left, leading to a lower price and lower quantity.

4. The law of demand states that, ceteris paribus, an increase in the price of a good will cause which of the following?

(A)A decrease in demand for the good.(B)A decrease in the quantity demanded of the good.(C)An increase in the supply of the good.(D)An increase in the quantity supplied of the good.

5. If the price of jet fuel, a key input in the production of airline flights, increases, what will be the immediate impact on the market for airline flights?

(A)The supply curve for flights will shift to the right.(B)The supply curve for flights will shift to the left.(C)The demand curve for flights will shift to the left.(D)The quantity supplied of flights will decrease.

6. If a 5% increase in the price of a product leads to a 15% decrease in the quantity demanded, the price elasticity of demand is

(A)-1/3, and demand is inelastic.(B)-3, and demand is elastic.(C)-1/3, and demand is elastic.(D)-3, and demand is inelastic.

7. A local pizza restaurant wants to increase its total revenue. The owner knows that the price elasticity of demand for their pizza is -0.5. To achieve this goal, the restaurant should

(A)increase the price of its pizza.(B)decrease the price of its pizza.(C)keep the price of its pizza the same, but increase advertising.(D)decrease the quantity of pizza it produces to create a shortage.

8. The supply of beachfront property is likely to be very inelastic. Which of the following best explains why?

(A)The cost of building on beachfront property is very high.(B)The demand for beachfront property is very high.(C)There are many substitutes for beachfront property.(D)The quantity of land available on the coast is relatively fixed and cannot be easily increased.

9. The cross-price elasticity of demand between good X and good Y is 1.5. A 10% decrease in the price of good Y will lead to a

(A)15% decrease in the quantity demanded of good X.(B)15% increase in the quantity demanded of good X.(C)1.5% decrease in the quantity demanded of good X.(D)6.67% increase in the price of good X.

10. For an inferior good, the income elasticity of demand is

(A)positive and greater than 1.(B)positive and less than 1.(C)negative.(D)equal to zero.

Questions 11-12 refer to the graph below, which shows the market for rental apartments in a city.

11. If the government imposes a binding price ceiling of $900 per month as shown in the graph, what will be the result in the market?

(A)A surplus of 2,000 apartments.(B)A shortage of 2,000 apartments.(C)A surplus of 1,000 apartments.(D)The market will remain in equilibrium at $1,200.

12. Which of the following describes a policy that would have the opposite effect of the price ceiling shown?

(A)A subsidy given to renters to help them afford housing.(B)A binding price floor set at $1,500.(C)A non-binding price ceiling set at $1,500.(D)A per-unit tax placed on apartment landlords.

13. In a competitive market, if the current price is below the equilibrium price, which of the following will occur?

(A)There will be a surplus, and the price will tend to fall.(B)There will be a surplus, and the price will tend to rise.(C)There will be a shortage, and the price will tend to fall.(D)There will be a shortage, and the price will tend to rise.

14. Which of the following would cause the entire market demand curve for new cars to shift to the left?

(A)A decrease in the price of new cars.(B)An increase in the price of gasoline, a complement to cars.(C)An increase in consumer incomes, assuming new cars are a normal good.(D)A successful advertising campaign by car manufacturers.

15. The government imposes a per-unit excise tax on the producers of a good. The deadweight loss resulting from this tax will be largest when

(A)both supply and demand are highly inelastic.(B)both supply and demand are highly elastic.(C)supply is highly elastic and demand is perfectly inelastic.(D)supply is perfectly inelastic and demand is highly elastic.

16. The demand for a life-saving medication is perfectly inelastic. If the government imposes a price ceiling below the market equilibrium price for this medication, which of the following outcomes is most likely?

(A)Total expenditure on the medication will decrease.(B)A large surplus of the medication will be created.(C)A shortage of the medication will occur, and the quantity exchanged will fall.(D)The quantity of medication exchanged will remain the same, but a shortage will still exist.

17. The market supply curve for a product is derived by

(A)vertically summing the individual supply curves of all producers.(B)horizontally summing the individual supply curves of all producers.(C)finding the average quantity supplied at each price level.(D)selecting the supply curve of the most efficient producer in the market.

Questions 18-19 refer to the graph below, showing the domestic market for sugar.

18. If this country opens to international trade, what will be the quantity of sugar imported?

(A)20 million pounds(B)40 million pounds(C)80 million pounds(D)100 million pounds

19. Suppose the government imposes a tariff that raises the domestic price of sugar to $0.30. Compared to the free trade outcome, this tariff will

(A)decrease domestic production and increase consumer surplus.(B)increase domestic production and decrease consumer surplus.(C)increase imports and generate government revenue.(D)decrease producer surplus and create no deadweight loss.

20. The downward slope of the demand curve is explained by the income and substitution effects. If the price of pizza falls, the substitution effect refers to the change in consumption that results from

(A)the consumer's increased purchasing power.(B)pizza now being relatively cheaper than other goods, like tacos.(C)the lower quality of pizza that is now being sold.(D)the expectation that pizza prices will fall even further in the future.

AP Microeconomics Unit 2: Supply and Demand Practice Exam

Exam Details

A. Multiple-Choice Questions (20 Questions)

B. Short Answer Questions (2 Questions)

AP Microeconomics Unit 2: Supply and Demand Practice Exam

Exam Details

A. Multiple-Choice Questions (20 Questions)

B. Short Answer Questions (2 Questions)