Supply and Demand quiz

Microeconomics Supply and Demand questions and Answers

Question: An increase in product prices will cause
(a) quantity demanded to decrease
(b) quantity supplied to decrease
(c) quantity demanded to increase
(d) the demand curve to shift to the left

Answer. (a)

Question: Supply creates its own demand is the basis of:
(a) Classical economics
(b) Keynesian economics
(c) Monetarism
(d) None of these

Ans. (a)

Question: The quantity demanded depends on
(a) its price
(b) income
(c) price of other goods
(d) all of the above

Answer. (d)

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Question: When output exceeds spending:
(a) There is unsold output, and the level of output will fall.
(b) There is unsold output, and the level of output will rise.
(c) There is unsold output, and the level of spending will rise.
(d) There is no unsold output since the level of spending will rise

Ans. (a)

Question: In the case of a horizontal demand curve , the price elasticity of demand is
(a) equal to zero
(b) equal to one
(c) equal to two
(d) infinite

Answer. (a)

Question: The concept of effective demand is associated with the name of
(a) Marshall
(b) Keynes
(c) Krugman
(d) Say

Ans. (b)

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Question: Price elasticity of demand shows the relationship between demand for a commodity and
(a) price of other commodities
(b) price of that commodity
(c) tastes and preferences of the consumer
(d) income of the consumer

Answer. (b)

Question: If a consumer’s income increases, the demand for normal products:
(a) will remain unchanged
(b) will necessarily increase
(c) will necessarily decrease
(d) may increase or decrease

Answer. (b)

Question: Cross-price elasticity of demand between tea and coffee is
(a) negative
(b) positive
(c) zero
(d) infinite

Answer. (b)

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Question: Demand curve remaining the same, if the supply curve shifts to the right then
(a) Price and quantity move in the same direction
(b) Price and quantity move in the opposite direction
(c) Price and quantity remain unchanged
(d) None of the above

Answer. (b)

Question: A rightward shift in the supply schedule indicates
(a) a decrease in supply
(b) an increase in supply
(c) an increase in quantity supply
(d) a decrease in quantity supply

Answer. (b)

Question: __ Profits are
(a) the most important objective for a firm
(b) the result of supply and demand
(c) a function of revenue and expenses
(d) depends primarily on the quantity of product sold

Answer. (c)

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