Demand and Supply Quiz

What happens when the price of a good decreases, assuming all other factors remain constant?

• Demand shifts left

• Demand shifts right

• Quantity demanded increases

• Quantity demanded decreases

If there is an increase in the cost of production for a good, what is the most likely effect?

• Supply increases

• Supply decreases

• Demand increases

• Demand remains unchanged

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

• A decrease in the price of the good

• A rise in consumer income for a normal good

• An increase in the price of a complementary good

• A technological improvement in production

A subsidy given by the government to producers will likely:

• Decrease supply

• Increase supply

• Decrease demand

• Have no effect on supply

What happens if both demand and supply increase simultaneously?

• The equilibrium price always rises

• The equilibrium price always falls

• The equilibrium quantity always increases

• The equilibrium quantity always decreases

If a product has many close substitutes, its price elasticity of demand is likely to be:

• Perfectly inelastic

• Relatively elastic

• Unit elastic

• Perfectly elastic

A price elasticity of demand of -0.5 indicates that the demand for the good is:

• Elastic

• Inelastic

• Unitary elastic

• Perfectly elastic

If a company increases the price of a product and total revenue decreases, what does this indicate about the price elasticity of demand?

• The demand is elastic

• The demand is inelastic

• The demand is perfectly inelastic

• The demand has unitary elasticity

Which of the following is true for a perfectly inelastic demand curve?

• It is a horizontal line

• Consumers buy the same quantity regardless of price

• The elasticity coefficient is greater than 1

• It slopes downward from left to right

The demand for luxury goods tends to be:

• Perfectly inelastic

• Relatively inelastic

• Relatively elastic

• Unit elastic