Supply and Demand Quiz

What is price elasticity of demand?

• Price elasticity of demand is a measure of the responsiveness of the quantity supplied of a good or service to a change in its price.

• Price elasticity of demand is a measure of the responsiveness of the quantity demanded of a good or service to a change in its price.

• Price elasticity of demand is a measure of the responsiveness of the quantity demanded of a good or service to a change in its quality.

• Price elasticity of demand is a measure of the responsiveness of the quantity demanded of a good or service to a change in its income.

Answer explanation

The price elasticity of demand is a measure that reflects how the quantity demanded of a good or service changes in response to a change in its price. The correct option clearly indicates this by stating that it measures the responsiveness of quantity demanded to changes in price, as opposed to changes in quality, supply, or income.

How is price elasticity of demand calculated?

• Percentage change in quantity supplied divided by percentage change in price.

• Total revenue divided by quantity demanded.

• Percentage change in quantity demanded divided by percentage change in price.

• Percentage change in price divided by percentage change in quantity demanded.

What does a downward-sloping demand curve indicate?

• Increasing quantity demanded as price increases.

• Constant quantity demanded as price increases.

• No relationship between quantity demanded and price.

• Decreasing quantity demanded as price increases

What factors can cause a shift in the demand curve?

• Changes in consumer income, prices of unrelated goods, consumer preferences, population, and technological advancements.

• Changes in consumer income, prices of unrelated goods, consumer preferences, population, and government regulations.

• Changes in consumer income, prices of related goods, consumer preferences, population, and advertising and marketing efforts.

• Changes in producer income, prices of unrelated goods, producer preferences, population, and government regulations.

What is the law of supply?

• The law of supply states that as the price of a good or service increases, the quantity supplied by producers decreases, and vice versa.

• The law of supply states that as the price of a good or service decreases, the quantity supplied by producers also decreases, and vice versa.

• The law of supply states that as the price of a good or service increases, the quantity supplied by producers also increases, and vice versa.

• The law of supply states that as the price of a good or service increases, the quantity supplied by producers remains constant.

What does an upward-sloping supply curve indicate?

• As the price of a good or service increases, the quantity supplied by producers also increases.

• As the price of a good or service increases, the quantity supplied by producers decreases.

• An upward-sloping supply curve indicates a decrease in demand.

• An upward-sloping supply curve indicates a constant quantity supplied at all prices.

What factors can cause a shift in the supply curve?

• Changes in production costs, technology, number of suppliers, government regulations, and expectations about future prices.

• Changes in production efficiency, changes in consumer expectations, changes in consumer demographics

• Changes in consumer income, changes in consumer tastes and preferences, changes in government spending

• Changes in consumer demand, changes in exchange rates, changes in interest rates

What is the equilibrium price and quantity?

• The equilibrium price is $10 and the quantity is 100.

• The equilibrium price is $5 and the quantity is 50.

• Cannot determine without additional information

• The equilibrium price is $20 and the quantity is 200.

How does an increase in demand affect the equilibrium price and quantity?

• An increase in demand leads to a decrease in both the equilibrium price and quantity.

• An increase in demand leads to a decrease in the equilibrium price and an increase in quantity.

• An increase in demand leads to an increase in both the equilibrium price and quantity.

• An increase in demand has no effect on the equilibrium price and quantity.

How does a decrease in supply affect the equilibrium price and quantity?

• The equilibrium price decreases and the equilibrium quantity decreases.

• The equilibrium price decreases and the equilibrium quantity increases.

• The equilibrium price increases and the equilibrium quantity increases.

• The equilibrium price increases and the equilibrium quantity decreases.