supply and demand MCQs – Page 3

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

supply and demand Mcqs

41. An increase in aggregate demand if aggregate supply is totally inelastic will ?
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A. decrease output and price

B. increase output but not price

C. increase price but not output

D. increase output and price

42. Which of the following is consistent with the law of supply ?
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A. As the price of calculators rise, the quantity supplied of calculators decreases, ceteris paribus.

B. As the price of calculators calls the supply of calculators increases, ceteris paribus.

C. As the price of calculators rise, the quantity supplied of calculators increases, ceteris paribus.

D. As the price of calculators rise, the supply of calculators increases ceteris paribus.

43. An increase in the costs of production will ?
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A. Shift demand outwards

B. Shift supply inwards

C. Shift demand inwards

D. Shift supply outwards so more is supplied at each and every price, all other things unchanged

44. The price elasticity of supply is +4 The price increases by 15% sales were originally 200 units What will they be now ?
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A. 320 units

B. 120 units

C. 80 units

D. 60 units

45. Marginal revenue is the ________ when output is __________?
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A. Change in total revenue, increase by one unit

B. change in total revenue increased

C. change in average revenue, increased by one unit

D. Change in average revenue, increased

46. If demand is __________ then price cuts will _________ spending?
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A. elastic, decrease

B. elastic; increase

C. none of the above

D. inelastic; increase

47. An increase in aggregate demand will have most effect on prices if ?
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A. Aggregate supply is price inelastic

B. Aggregate supply has a unitary price elasticity

C. Aggregate demand is price inelastic

D. Aggregate supply is price elastic

48. The price elasticity of demand measures ?
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A. a change in price

B. How far a demand curve shifts

C. a change in quantity demanded

D. The responsiveness of quantity demanded to a change in price

49. A fall in price ?
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A. Will cause an outward shift of supply

B. Leads to a higher level of production

C. Will cause an inward shift of demand

D. May be caused by a fall in demand

50. If your income doubles and the prices of the goods you buy double then your demand for these goods will likely?
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A. not change

B. shift

C. decrease

D. increase

51. Positive cross elasticities suggest that goods are ____ and negative cross-elasticities that goods are ?
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A. normal, inferior

B. substitutes complements

C. substitutes inferior

D. normal, complements

52. For a normal good ?
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A. The price elasticity of demand is positive the income elasticity of demand is negative

B. The price elasticity of demand is negative the income elasticity of demand is negative

C. The price elasticity of demand is positive; the income elasticity of demand is positive

D. The price elasticity of demand is negative the income elasticity of demand is positive

53. The increase in total cost when one more unit is produced is known as ?
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A. marginal cost

B. limited cost

C. opportunity cost

D. average cost

54. The price elasticity of demand is a negative number this means ?
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A. An increase in income will reduce the quantity demanded

B. Demand is price inelastic

C. Demand is price elastic

D. The demand curve is downward sloping

55. An increase in price all other things unchanged leads to ?
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A. Shift demand inwards

B. A contractions of demand

C. Shift demand outwards

D. An extension of demand

56. Profits are maximized when ?
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A. average cost is less than average revenue

B. marginal cost equals marginal revenue

C. revenue is maximized

D. costs are minimized

57. According to the law of diminishing utility ?
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A. Increasing units of consumption increase the marginal utility

B. Utility is at a maximum with the first unit

C. Total utility will rise at a falling rate as more units are consumed

D. Marginal product will fall as more units are consumed

58. The price elasticity of demand is the ?
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A. ratio of the percentage change in quantity demanded to the percentage change in price.

B. ratio of the change in price to the change in quantity demanded.

C. ratio of the change in quantity demanded to the change in price.

D. ratio of the percentage change in price to the percentage change in quantity demanded.

59. Average income increase from Rs20,000 p.a to Rs 22,000 p.a 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 product is normal

D. Demand is price inelastic

60. The income elasticity is +2 and income increases by 20% sales were 5000 units, what will they be now ?
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A. 7000

B. 5500

C. 3000

D. 4500

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