supply and demand MCQs – Page 4

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

supply and demand Mcqs

61. If a product is a vablen good ?
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A. Demand is directly related to price

B. Demand is inversely related to price

C. Demand is inversely related to income

D. Demand is inversely related to the price of substitutes

62. An increase in price all other things unchanged leads to ?
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A. A contraction of supply

B. A shift in supply inwards

C. A shift in supply outwards

D. An extension of supply

63. An increase in the price of a complement for product A would ?
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A. Shift supply for product A inwards

B. Shift demand for product A inwards

C. Shift demand for Product A outwards

D. Shift supply for product A outwards

64. Demand for a normal product may shift outwards if ?
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A. Price decreases

B. income falls

C. The price of a substitute falls

D. The price of a complement rises

65. What effect is working when the price of a good falls and consumers tend to buy it instead of other goods ?
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A. The income effect

B. The diminishing marginal utility effect.

C. The ceteris paribus effect

D. The substitution effect

66. Market equilibrium exists when _________ at the prevailing price?
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A. quantity demanded equals quantity supplied

B. quantity demanded is less than quantity supplied

C. quantity supplied is greater than quantity demanded

D. quantity demanded is greater than quantity supplied

67. The price of computer chips used in the manufacture of personal computers has fallen. This will lead to _________ personal computer?
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A. an increase in the supply of

B. a decrease in the supply of

C. an increase in the quantity supplied of

D. a decrease in the quantity supplied of

68. A contraction in supply occurs when ?
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A. The quantity supplied falls when the price falls

B. The supply curve shifts outwards

C. The supply curve shifts inwards

D. Demand shifts outwards

69. Which best describes a demand curve ?
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A. The quantity consumers are willing and able to buy at each and every income all other things unchanged

B. the quantity consumers would like to buy in an ideal world

C. The quantity consumers are willing and able to buy each and every price all other things changed

D. The quantity consumers are willing to sell

70. Suppose the demand for good Z goes up when the price of good Y goes down. We can say that goods Z and Y are ?
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A. substitutes.

B. perfect substitutes

C. complements

D. unrelated goods.

71. If the quantity demanded of beef increases by 5% when the price of chicken increase by 20% the cross-price elasticity of demand between beef and chicken is ?
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A. -0.25

B. 0.25

C. -4

D. 4

72. Demand curves are derived while holding constant ?
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A. incomes, tastes, and the price of other goods.

B. tastes and the price of other goods

C. income, tastes, and the price of the good.

D. income and tastes

73. Price increases from 10 to 12 pence and the price elasticity of demand is -0.5 The quantity demanded was 500 units. What will it be now ?
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A. 450 units

B. 500 units

C. 490 units

D. 550 units

74. Which best describes a supply curve ?
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A. The quantity producers are willing and able to sell at each and every price all other things unchanged

B. The quantity producers are willing and able to sell at each and every income all other things unchanged

C. The quantity producers are willing and able to sell at each and every point in time all other things unchanged

D. The quantity consumers would like to buy in an ideal world

75. If the price elasticity of demand is unit then a fall in price ?
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A. Leaves revenue unchanged

B. Increase revenue

C. Reduces costs

D. Reduces revenue

76. Supply is likely to be more price elastic ?
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A. If it is easy to expand output

B. If factors of production are relatively immobile between industries

C. In the short run rather than the long run

D. If there are very few producers

77. An increase in price from 25 pence to 30 pence leads to an increase in the quantity supplied from 40 units to 44 units. The price elasticity of supply is ?
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A. +0.5

B. 2

C. -2

D. -0.5

78. The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ____________?
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A. perfectly elastic

B. inelastic.

C. elastic

D. unitarily elastic

79. For an inferior good ?
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A. The price elasticity of demand is negative: the income elasticity of demand is negative

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

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

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

80. The law of demand implies that ?
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A. as prices rise, quantity demanded increases

B. as prices fall, quantity demanded increase

C. as prices rise, demand decrease

D. as prices fall demand increases

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