Practice Questions
Apply the law of supply to explain a mango seller's behavior when the price of mangoes increases from ₹100 per kg to ₹150 per kg during the early season.
Justify why a price set above the equilibrium price leads to a surplus.
Apply the concept of complementary goods to explain the change in demand for printer ink cartridges if the price of printers falls significantly.
Critique the statement: 'My desire to own a luxury sports car represents my demand for it.'
Examine what happens to the supply of handmade sweaters if the wages for skilled knitters increase significantly, assuming other factors remain constant.
Formulate a reason, based on the principle of diminishing marginal utility, why a demand curve slopes downwards.
Solve for the market condition when the price of a textbook is set at ₹150, the quantity demanded is 500 units, and the quantity supplied is 1,200 units.
Identify one factor, other than price, that can cause a change in the supply of a good.
Name the two main types of related goods that can influence the demand for a product.
Define the term 'demand' in economics.
Recall the term for a situation where the quantity supplied of a good is greater than the quantity demanded at a given price.
Justify the statement: 'An increase in consumer income will not always lead to an increase in demand for all goods.'
Evaluate the effectiveness of the 'Law of Supply' in explaining the supply of rare, non-reproducible items like a famous artist's original painting.
A new technology allows farmers to use drip irrigation, which increases crop yield by 30 percent. Analyze how this technological advancement affects the market supply curve for that crop.
A farmer can grow either cotton or soybeans on their land. Analyze how a significant fall in the global price of cotton would affect the farmer's supply decision for the next season and the market supply of soybeans.
Examine the potential negative consequences of excessive government regulation, such as requiring numerous licenses and permits to open a small restaurant. Analyze its impact on entrepreneurship and market competition.
Examine the government's decision to provide public parks and streetlights. Analyze why private companies are unlikely to offer these services and how the government funds them.
Evaluate the long-term consequences of the government imposing a strict price ceiling on essential medicines, well below the market equilibrium price. Consider the impact on consumers, producers, and the overall availability of the medicine.
Demonstrate how the principle of diminishing marginal utility explains the downward slope of an individual's demand curve, using the example of drinking glasses of lemonade on a hot day.
Create a hypothetical scenario for a new eco-friendly smartphone. Describe one factor that would cause a shift in its demand curve and a separate factor that would cause a shift in its supply curve. Then, evaluate the combined effect on the equilibrium price and quantity.
A group of farmers adopts a new drone technology for pesticide spraying, which reduces costs and time. Formulate an argument explaining how this will affect the market supply curve for their crops.
Critique the argument that government intervention in the market is always harmful and leads to inefficiency. Use the example of public goods to support your critique.
Evaluate the claim that a laptop and a desktop computer are perfect substitute goods.
Explain the law of demand and describe why the demand curve for a typical good slopes downwards.
Describe the concept of 'market equilibrium'.
Describe how a change in 'future price expectations' can affect the current demand for a product.
What is a 'price floor'?
Explain the 'law of supply' and state why the supply curve is typically upward sloping.
Describe the role of government in regulating unfair market practices using the examples of a 'price ceiling' and a 'price floor'.
Compare the individual demand curve of a single consumer with the market demand curve for a product like mangoes and analyze why the market demand curve is typically flatter.
Analyze the impact of a sudden, sharp increase in the price of petrol on the market demand for both electric cars and car accessories like seat covers.
Examine why the equilibrium in real-world markets, such as the market for airline tickets, is considered dynamic and not static.
Propose a plan for how a local community could fund and maintain a new public park without complete reliance on government funds.
Explain what happens in a market when there is 'excess demand' for a product.
Explain the difference between 'individual demand' and 'market demand'.
Design a policy for a city government that wants to reduce traffic congestion. Your policy must incorporate both a market-based solution and a non-market government regulation, and you must justify why the combination is superior to using only one method.
A weather forecast predicts a severe hailstorm will destroy much of the apple crop in two weeks. Analyze how this news would likely affect the current demand for apples.
Summarize the potential negative consequences of excessive government intervention in markets.
Compare the market for a unique, life-saving medicine produced by a single company with the market for rice, which is produced by thousands of farmers. Analyze the difference in price determination.
Compare and contrast the effects of a government-imposed price ceiling set below the equilibrium price and a price floor set above the equilibrium price on a market for wheat.
A weather forecast predicts a severe drought will impact next year's wheat harvest. Propose a set of actions that the government could take now to mitigate the expected price shock and ensure food security, and justify each action.
List and explain three non-price factors that determine the supply of a good.
Critique the concept of a static market equilibrium as a practical tool for understanding real-world markets like the stock market or the market for flight tickets.
Design a government intervention policy to discourage the consumption of sugary drinks that avoids the potential shortages of a price ceiling or the regressivity of a simple tax.
Summarize why public goods like streetlights and national defense are usually provided by the government.