Econ Supply Demand Quiz

What does the price elasticity of demand measure?

• The responsiveness of quantity demanded to a change in price

• The responsiveness of quantity supplied to a change in price

• The total revenue generated from sales

• The equilibrium price in the market

If the price elasticity of demand for a product is greater than 1, the demand for the product is considered:

• Inelastic

• Elastic

• Unitary elastic

• Perfectly inelastic

At market equilibrium:

• Quantity demanded is greater than quantity supplied

• Quantity supplied is greater than quantity demanded

• Quantity demanded equals quantity supplied

• Price is at its highest point

Which of the following would cause a rightward shift in the demand curve for a normal good?

• A decrease in consumer income

• An increase in the price of a substitute good

• A decrease in the price of a complementary good

• An increase in consumer income

Consumer surplus is defined as:

• The difference between what consumers are willing to pay and what they actually pay

• The difference between the market price and the cost of production

• The total revenue minus total cost

• The additional satisfaction gained from consuming one more unit of a good

Producer surplus is:

• The difference between the market price and the minimum price at which producers are willing to sell

• The total revenue minus total cost

• The additional satisfaction gained from producing one more unit of a good

• The difference between what consumers are willing to pay and what they actually pay

If the supply curve shifts to the left, what is the likely effect on the equilibrium price and quantity?

• Equilibrium price decreases, equilibrium quantity increases

• Equilibrium price increases, equilibrium quantity decreases

• Equilibrium price decreases, equilibrium quantity decreases

• Equilibrium price increases, equilibrium quantity increases

Which of the following is an example of a perfectly inelastic demand?

• Demand for luxury cars

• Demand for insulin for diabetics

• Demand for smartphones

• Demand for vacation packages

Which of the following represents the correct formula for price elasticity of demand?

A decrease in the price of a complementary good will:

• Shift the demand curve for the related good to the left

• Shift the demand curve for the related good to the right

• Shift the supply curve for the related good to the left

• Shift the supply curve for the related good to the right