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
Demand curve of a firm under perfect competition is:
(a) horizontal to ox-axis
(b) negatively sloped
(c) positively sloped
(d) U – shaped
Consumer surplus is the state where a consumer willing to pay higher price actually pays
(a) Higher price
(b) Lower price
(c) Sometimes higher & sometimes lower price
(d) None of the above
Supply creates its own demand is the basis of:
(a) Classical economics
(b) Keynesian economics
(c) Monetarism
(d) None of these
A horizontal demand curve is
(a) ralatively elastic
(b) perfectly inelastic
(c) perfectly elastic
(d) of unitary elasticity
Change in the demand of smart phones due to increase in its price is
(a) Increase of its demand
(b) Decrease of its demand
(c) Contraction of its demand
(d) None of the above
Movement along the same demand curve is know as
(a) Extension and Contraction of Demand
(b) Increase and Decrease of Demand
(c) Contraction of supply
(d) Increase of supply
The quantity demanded depends on
(a) its price
(b) income
(c) price of other goods
(d) all of the above
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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
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
Normal demand curve of a commodity has:
(a) has positive slope
(b) has negative slope
(c) Is parallel to the base line
(d) None of the above
When there is one buyer and many sellers then that situation is called
(a) Monopoly
(b) Single buyer right
(c) Down right
(d) Double buyers right
Who said ‘Supply creates its own demand’?
(a) Adam Smith
(b) J.B.Saw
(c) Marshall
(d) Ricardo
When the price of Coffee increases and the demand for Coldrink increase then……..
(a) Coffee and Coldrink are
(b) Coffee and Coldrink are complimentary for each other
(c) Coffee and Coldrink are noncomplimentary for each other
(d) None of the above
The concept of effective demand is associated with the name of
(a) Marshall
(b) Keynes
(c) Krugman
(d) Say
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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
Demand of commodity mainly depends upon–
(a) Purchasing will
(b) Purchasing power
(c) Tax policy
(d) Advertisement
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
In case of __ demand, a slight change in the price will make greater change in demand.
(a) Inelastic
(b) Elastic
(c) Perfectly elastic
(d) Perfectly inelastic
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
Cross-price elasticity of demand between tea and coffee is
(a) negative
(b) positive
(c) zero
(d) infinite
Demand in Economics means:
(a) Aggregate demand
(b) Market demand
(c) Individual demand
(d) Demand backed by purchasing power
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
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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
Cross elasticity of demand between petrol and car is
(a) infinite
(b) positive
(c) zero
(d) negative
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
Which of the followings can be regarded as an exception to law of demand?
(a) Cases of snob appeal (e.g. jewels)
(b) Cases in which consumer judges quality by price
(c) Cases of Giffen goods
(d) All of the above
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
The demand for necessities is
(a) elastic
(b) perfectly inelastic
(c) inelastic
(d) perfectly elastic
The Law of Demand expresses
(a) effect of change in price of a commodity on its demand
(b) effect of change in demand of a commodity on its price
(c) effect of change in demand of a commodity over the supply of its substitute
(d) None of the above
__ 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
What happens when there is a demand deficiency in an economy?
(a) Poverty
(b) Stagnation
(c) Recession
(d) Inflation
An exceptional demand curve is one that moves
(a) upward to the right
(b) downward to the right
(c) horizontally
(d) vertically
