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Supply and Demand/MCQs

Supply and Demand – MCQs

81 questions. Click to practice.

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Correct options are highlighted when revealed.

1.Which statement most accurately defines a supply curve?

The amount buyers desire to purchase under perfect conditionsThe quantity that sellers are prepared and able to offer at every price, assuming all else remains constantThe volume sellers are ready and able to provide at every income level, holding other factors fixedThe quantity producers are willing and capable of selling at every moment in time, with other factors unchanged

2.Which of the following correctly describes the elasticities associated with an inferior good?

Price elasticity of demand is negative; income elasticity of demand is negativePrice elasticity of demand is positive; income elasticity of demand is negativePrice elasticity of demand is negative; income elasticity of demand is positivePrice elasticity of demand is positive; income elasticity of demand is positiveNone of the above

3.If the price rises from 10 pence to 12 pence and the price elasticity of demand is -0.5, what is the new quantity demanded given that the original quantity was 500 units?

550 units500 units450 units490 units

4.If the income elasticity of demand is +2 and income rises by 20%, what will be the new sales volume given the initial sales were 5,000 units?

3,000 units7,000 units5,500 units4,500 units6,000 units

5.What happens to total revenue when the price elasticity of demand equals one and the price decreases?

Total revenue decreasesTotal revenue remains the sameTotal revenue increasesCosts decreaseNo effect on demand

6.If the average annual income rises from Rs 20,000 to Rs 22,000 and the yearly quantity demanded increases from 5,000 to 6,000 units, which statement is accurate?

The demand is insensitive to price changesThis item is considered an inferior goodThe income elasticity equals -2The good is classified as normalNone of the above

7.What characterizes the demand for a Veblen good?

Demand decreases as consumer income risesDemand falls when the product's price goes upDemand increases when the product's price risesDemand drops as the price of substitute goods decreasesDemand remains unchanged regardless of price changes

8.What is the effect on the demand for product A if the price of its complementary good rises?

The demand curve for product A shifts to the rightThe demand curve for product A shifts to the leftThe supply curve for product A shifts to the rightThe supply curve for product A shifts to the leftNo change occurs in the demand or supply of product A

9.What does it indicate when marginal utility equals zero?

The overall utility is zeroConsuming one more unit will reduce total utilityConsuming an additional unit will raise total utilityThe total utility has reached its highest point

10.Under which circumstance would the demand curve for a normal good shift to the right?

When the product's own price dropsWhen the cost of an alternative product decreasesWhen the price of a complementary good increasesWhen consumers experience a decline in income

11.Which statement most accurately defines a demand curve?

The amount buyers desire to purchase under perfect conditionsThe quantity sellers are prepared to offerThe volume consumers can and want to purchase at every income level, assuming other factors remain constantThe amount consumers are willing and able to buy at every possible price, holding other factors constant

12.If the demand for beef rises by 5% as the price of chicken goes up by 20%, what is the cross-price elasticity of demand between beef and chicken?

-4.00.254.0-0.25None of the above

13.If the price of burgers rises by 22% and the quantity demanded decreases by 25%, how would you describe the demand for burgers?

elasticperfectly elasticunit elasticinelasticnone of the above

14.What does the price elasticity of demand measure?

The proportion of price change relative to the change in quantity demanded.The ratio of the percentage change in quantity demanded to the percentage change in price.The proportion of quantity demanded change compared to the price change.The ratio of the percentage change in price to the percentage change in quantity demanded.The absolute difference between price and quantity demanded.

15.At the current market price, when does market equilibrium occur?

The amount buyers want equals the amount sellers offerThe quantity buyers desire is lower than what sellers provideThe quantity sellers provide exceeds what buyers wantThe quantity buyers want surpasses what sellers supply

16.If the cost of computer chips, a key component in making personal computers, declines, what will be the effect on the market for personal computers?

a reduction in the quantity of personal computers supplieda decline in the overall supply of personal computersa rise in the quantity of personal computers suppliedan expansion in the supply of personal computersno change in supply or quantity supplied of personal computers

17.Which factor does NOT lead to a shift in the demand curve for compact discs?

Variation in consumer wealthAlteration in the price of compact discsChange in consumer incomeModification in the price of substitute goodsChange in consumer preferences

18.If the demand for product Z increases as the price of product Y decreases, how would you classify the relationship between goods Z and Y?

exact substitutescomplementary goodsindependent goodsalternative goodsnone of the above

19.When deriving demand curves, which factors are assumed to remain unchanged?

Consumers' incomes, preferences, and prices of related goods.Income levels, preferences, and the price of the good itself.Income and consumer preferences only.Preferences and prices of substitute or complementary goods.None of the above.

20.Which phenomenon occurs when a decrease in the price of a product leads consumers to purchase more of it instead of alternative products?

The all other factors held constant effectThe effect of declining additional satisfactionThe substitution effectThe purchasing power effect

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