Supply and Demand Quiz

What does the Law of Demand state?

• As the price of a good increases, the quantity demanded increases.

• As the price of a good decreases, the quantity demanded remains unchanged.

• As the price of a good increases, the quantity demanded decreases.

• As the price of a good decreases, the supply of the good increases.

What is a determinant of supply?

• Consumer preferences

• Input prices

• Income of buyers

• Price of related goods

What causes a movement along the supply curve?

• A change in technology

• A change in the price of the product

• A change in input prices

• A change in government policy

What does a rightward shift in the Aggregate Demand curve indicate?

• Decrease in overall demand

• Increase in overall demand

• Decrease in overall supply

• Increase in overall supply

Which of the following is a factor that shifts Aggregate Demand?

• Changes in consumer confidence

• Changes in the price of the product

• Changes in the technology used in production

• Changes in the price of inputs

What is Income Elasticity of Demand?

• The responsiveness of demand to a change in the price of another good

• The responsiveness of demand to a change in consumers' income

• The responsiveness of supply to a change in the price of the product

• The responsiveness of supply to a change in technology

What happens at the Equilibrium Price and Quantity in a market?

• Demand exceeds supply

• Supply exceeds demand

• Quantity demanded equals quantity supplied

• There is no demand or supply

How does an increase in income affect the demand for a normal good?

• Demand decreases

• Demand remains unchanged

• Demand increases

• Demand first increases, then decreases

What is the effect of a subsidy (sum of money granted) on the supply of a product?

• Decreases supply

• Increases supply

• No effect on supply

• Initially increases supply, then decreases

What does the Law of Supply state?

• As the price of a good increases, the quantity supplied decreases.

• As the price of a good decreases, the quantity supplied increases.

• As the price of a good increases, the quantity supplied increases.

• As the price of a good decreases, the quantity supplied remains unchanged.