Economics Quiz: Determination of Price and Quantity

What is the main aim of the seller when fixing the price of a commodity?

• To match the price of other sellers

• To increase sales volume

• To earn maximum profit

• To cover production costs

What is the equilibrium price of a commodity?

• The price at which quantity demanded and supplied are equal

• The highest price in the market

• The lowest price in the market

• The average price in the market

What is the meaning of equilibrium quantity?

• The lowest quantity demanded in the market

• The average quantity demanded in the market

• The highest quantity demanded in the market

• The quantity demanded and supplied at equilibrium price

How is equilibrium price of a commodity determined?

• By the market forces of demand and supply

• By the buyer's negotiation

• By the seller's preference

• By the government regulations

What happens to the price of a commodity when there is excess demand?

• Price fluctuates randomly

• Price starts falling

• Price remains the same

• Price starts rising

What happens to the price of a commodity when there is excess supply?

• Price starts falling

• Price remains the same

• Price starts rising

• Price fluctuates randomly

How is equilibrium price of a commodity affected when demand increases but supply remains the same?

• Equilibrium price will remain the same

• Equilibrium price will fluctuate randomly

• Equilibrium price will decrease

• Equilibrium price will increase

Explain the effect of decrease in supply of a commodity on its equilibrium price and equilibrium quantity demanded and supplied when its demand remains the same.

• Equilibrium price will decrease and equilibrium quantity will decrease

• Equilibrium price will increase and equilibrium quantity will increase

• Equilibrium price will decrease and equilibrium quantity will increase

• Equilibrium price will increase and equilibrium quantity will decrease

What is the situation when quantity demanded of a commodity is greater than its quantity supplied?

• Market saturation

• Equilibrium situation

• Excess supply

• Excess demand

What is the situation when quantity supplied of a commodity is greater than its quantity demanded?

• Market saturation

• Excess demand

• Excess supply

• Equilibrium situation