Supply and Demand quiz

Microeconomics Supply and Demand Questions and Answers

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)

The demand curve of a firm under perfect competition is:
(a) horizontal to ox-axis
(b) negatively sloped
(c) positively sloped
(d) U – shaped

Answer. (a)

Consumer surplus is the state where a consumer willing to pay a higher price pays
(a) Higher price
(b) Lower price
(c) Sometimes higher & sometimes lower price

Ans. (b)

Supply creates its demand based on :
(a) Classical economics
(b) Keynesian economics
(c) Monetarism

Ans. (a)

A horizontal demand curve is
(a) relatively elastic
(b) perfectly inelastic
(c) perfectly elastic
(d) of unitary elasticity

Answer. (c)

Change in the demand for smartphones due to increases in its price is
(a) Increase in its demand
(b) Decrease of its demand
(c) Contraction of its demand

Ans. (c)

Movement along the same demand curve is known as
(a) Extension and Contraction of Demand
(b) Increase and Decrease of Demand
(c) Contraction of supply
(d) Increase of supply

Answer. (b)

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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When output exceeds spending:
(a) There is unsold output, and the output level will fall.
(b) There is unsold output, and the output level 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)

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)

The standard demand curve of a commodity has:
(a) has positive slope
(b) has negative slope
(c) Is parallel to the baseline

Ans. (b)

When there is one buyer and many sellers, then that situation is called
(a) Monopoly
(b) Single buyer right
(c) Downright
(d) Double buyer’s right

Answer. (b)

Who said ‘Supply creates its own demand’?
(a) Adam Smith
(b) J.B.Saw
(c) Marshall
(d) Ricardo

Answer. (b)

When the price of Coffee increases and the demand for Coldrink increases, then……..
(a) Coffee and Coldrink are
(b) Coffee and Coldrink are complimentary for each other
(c) Coffee and Coldrink are noncomplimentary for each other

Ans. (a)

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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The 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)

Demand for commodity mainly depends upon–
(a) Purchasing will
(b) Purchasing power
(c) Tax policy
(d) Advertisement

Answer. (b)

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

Answer. (b)

In the case of __ demand, a slight change in the price will make a greater change in demand.
(a) Inelastic
(b) Elastic
(c) Perfectly elastic
(d) Perfectly inelastic

Ans. (c)

If a good has negative income elasticity and positive price elasticity of demand, it is a
(a) Giffen good
(b) normal good
(c) superior good
(d) an inferior good

Answer. (a)

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

Answer. (b)

Demand in Economics means:
(a) Aggregate demand
(b) Market demand
(c) Individual demand
(d) Demand backed by purchasing power

Answer. (d)

All of the goods which are scarce and limited in supply are called
(a) Luxury goods
(b) Expensive goods
(c) Capital goods
(d) Economic goods

Answer. (d)

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The demand curve remains 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

Answer. (b)

The cross elasticity of demand between petrol and cars is
(a) infinite
(b) positive
(c) zero
(d) negative

Answer. (d)

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)

Which of the following can be regarded as an exception to the law of demand?
(a) Cases of snob appeal (e.g. jewels)
(b) Cases in which consumers judge quality by price
(c) Cases of Giffen goods
(d) All of the above

Ans. (d)

Cross-demand expresses the functional relationship between
(a) demand and prices of related commodities.
(b) demand and income.
(c) demand and prices.
(d) demand and supply

Answer. (a)

The demand for necessities is
(a) elastic
(b) perfectly inelastic
(c) inelastic
(d) perfectly elastic

Answer. (b)

The Law of Demand expresses
(a) effect of change in price of a commodity on its demand
(b) impact of change in demand for a commodity on its price
(c) impact of change in demand of a commodity over the supply of its substitute

Answer. (a)

__ 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)

What happens when there is a demand deficiency in an economy?
(a) Poverty
(b) Stagnation
(c) Recession
(d) Inflation

Answer. (b)

An exceptional demand curve moves
(a) upward to the right
(b) downward to the right
(c) horizontally
(d) vertically

Answer. (b)

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