Supply and Demand Microeconomics Quiz

What does the law of supply and demand state?

• The price of a good rises as the supply increases.

• The price of a good falls when demand decreases.

• The price of a good adjusts to bring the quantity supplied and quantity demanded into balance.

• The supply of a good will decrease as its price decreases.

What is market equilibrium?

• When the quantity of goods supplied is greater than the quantity demanded.

• When the quantity of goods demanded is greater than the quantity supplied.

• When the quantity of goods supplied is equal to the quantity demanded.

• When the government intervenes to set the market price.

Which of the following factors can cause the demand curve to shift to the right?

• A decrease in the price of the good.

• An increase in consumers' income.

• An increase in the price of a substitute good.

• Both B and C are correct.

What does price elasticity of demand measure?

• The responsiveness of the quantity demanded to a change in income.

• The responsiveness of the quantity demanded to a change in the price of a good.

• The responsiveness of the quantity supplied to a change in the price of a good.

• The change in price that results from a one-unit increase in supply.

What happens to the supply curve when there is an improvement in production technology?

• It shifts to the left.

• It shifts to the right.

• It becomes steeper.

• It becomes flatter.

How does a price ceiling below the equilibrium price affect the market?

• It increases the quantity supplied.

• It decreases the quantity demanded.

• It creates a surplus.

• It creates a shortage.

What is a price floor?

• A legal minimum on the price at which a good can be sold.

• A legal maximum on the price at which a good can be sold.

• A recommended price set by the government.

• A market-determined minimum price.

Which of the following is likely to cause a shift in the supply curve to the left?

• A decrease in the price of raw materials.

• An increase in taxes on the good being produced.

• A technological advancement in production.

• A decrease in the number of producers.

What does a perfectly inelastic demand curve look like?

• Horizontal

• Vertical

• Upward sloping

• Downward sloping

What effect does an increase in consumer income have on the demand for a normal good?

• Demand decreases.

• Demand increases.

• Demand remains unchanged.

• The effect on demand cannot be determined.