Economics study desk with supply and demand curves, scales and an economic city model

Focused topic practice

supply and demand MCQs

Practise focused supply and demand questions with marked answers for exam preparation and subject revision.

supply and demand Mcqs

1. An increase in income should ?
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A. shift demand for an inferior product inward

B. Shift supply for an inferior product inward

C. Shift demand for an inferior product outward

D. shift supply for an inferior product outward

2. Adding up the quantities demanded of a good by different people facing the same price gives us the ?
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A. Demand curve

B. Market demand curve

C. Supply curve

D. Market supply curve

3. A measurement showing how quantity demanded varies with income is the ?
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A. income elasticity of demand

B. budget elasticity of demand

C. Cross-price elasticity of demand

D. Price elasticity of demand

4. Economics assumes that people consume goods and services to achieve ?
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A. Status

B. Self-esteem

C. Utility

D. Prestige

5. Which of the following would increase aggregate demand ?
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A. Increased saving

B. Increasing import spending

C. Increased taxation revenue

D. increased investment

6. The price decrease from Rs 2,000 to Rs 1,800 Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
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A. Income elasticity is + 2

B. The good is inferior

C. The price elasticity of demand is -2

D. Income elasticity is + 0.5

7. if demand is price inelastic ?
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A. An increase in price must raise profits

B. A decrease in price reduces sales

C. An increase in price decrease revenue

D. An increase in price increase revenue

8. If the cross-price elasticity of demand between two goods is negative, then the two goods are ?
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A. Substitutes.

B. Complements

C. unrelated goods

D. normal goods

9. Improved training of employees would ?
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A. Shift aggregate demand to the right

B. Shift aggregate supply to the right

C. shift aggregate demand to the left

D. Shift aggregate supply to the left

10. The Setrite Corporation produce chairs. An economist working for the firm predicts that if peoples incomes rise next year, then the demand for our chairs will for our chairs will increase ceteris paribus The accuracy of the economists prediction depends on whether the chairs Setrite Produce ?
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A. are normal goods

B. have many complementary goods.

C. have few complementary goods.

D. have few substitutes.

11. If the cross elasticity of demand is -2 ?
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A. The products are complements and demand is cross price inelastic

B. The products are complements and demand is cross price elastic

C. The products are substitutes and demand is cross price elastic

D. The products are substitutes and demand is cross price inelastic

12. Firms are assumed to ________ costs and to ________ profits?
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A. charge earns

B. incur, desire

C. minimize, maximize

D. pay, make

13. If both marginal cost and marginal revenue increase, a firm ?
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A. Should increase output

B. Should reduce output

C. Should not change output

D. will require further information on how to respond

14. Inferior goods have _________ and luxury goods have _________?
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A. income elasticity greater than 1, negative income elasticities

B. negative income elasticity income elasticity greater than 1

C. Positive income elasticities, negative income elasticities

D. None of the above

15. Aggregate demand will increase if ?
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A. consumption falls

B. imports fall

C. investment falls

D. Exports fall

16. Which of the following would decease aggregate demand ?
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A. increasing export revenue

B. increased taxation revenue

C. increase consumption

D. increased investment

17. If a 4% increase in price leads to a increase in the quantity supplied of 8% ?
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A. Price elasticity of supply is -2

B. Supply is income elastic

C. Price elasticity of demand is -2

D. Supply is price elastic

18. Increased level consumption ?
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A. shift aggregate demand to the left

B. shift aggregate supply to the right

C. shift aggregate demand to the right

D. shift aggregate supply to the left

19. Increased levels of spending on imports ?
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A. shift aggregate supply to the right

B. shift aggregate demand to the right

C. shift aggregate supply to the left

D. shift aggregate demand to the left

20. The opportunity cost of a student is____________?
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A. Course fees and rent

B. What the student could have earned in the best job available by not studying

C. What the student will earn after graduation

D. A loan from the bank

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