Supply and Demand Basics Quiz

What does the Law of Demand state?

• As the price increases, demand increases.

• As the price decreases, demand remains unchanged.

• As the price increases, demand decreases.

• As the price decreases, supply increases.

What does the Law of Supply state?

• As the price increases, supply decreases.

• As the price decreases, supply increases.

• As the price increases, supply increases.

• As the price decreases, supply remains unchanged.

What is Market Equilibrium?

• It is when demand is greater than supply.

• It is when supply is greater than demand.

• It is when demand equals supply.

• It is when the government sets the price for goods and services.

What does price elasticity measure?

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

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

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

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

If the price of a good increases, what happens to the quantity demanded, according to the Law of Demand?

• It increases.

• It decreases.

• It remains unchanged.

• It first decreases, then increases.

If the cost of production for a good decreases, what is likely to happen to its supply?

• Supply decreases.

• Supply increases.

• Supply remains unchanged.

• Supply first increases, then decreases.

What happens to the market price when there is an excess supply?

• It increases.

• It decreases.

• It remains unchanged.

• It first decreases, then increases.

What happens to the market price when there is an excess demand?

• It increases.

• It decreases.

• It remains unchanged.

• It first increases, then decreases.

What is an example of a good with inelastic demand?

• Gold jewelry

• Designer clothes

• Gasoline

• Smartphones

If a product's price elasticity of demand is less than 1, the product is considered to be:

• Perfectly elastic.

• Elastic.

• Inelastic.

• Unit elastic.