WorksheetsWHSS Economics: Demand & Supply
Total questions: 35
Worksheet time: 41mins
Lithium is an essential metal for the production of electric cars. Following a 10% increase in the price of lithium, supplies increase by 15%. This led to a 5% increase in the price of electric cars. What is the price elasticity of supply (PES) for lithium?
A 0.33
B 0.66
C 1.50
D 2.0
A
B
C
D
The diagram shows market demand and supply curves.
To what extent is the market in disequilibrium at price P3?
A OQ1 – OQ2
B OQ1 – OQ3
C OQ2 – OQ4
D OQ3 – OQ5
A
B
C
D
The price of bread rose by 5% and the quantity demanded fell by 4%. What was the price elasticity of demand for bread?
A –0.4
B –0.8
C –1.25
D –2.0
A
B
C
D
The diagrams show the supply curve for an individual grower of tomatoes and for the total market supply of tomatoes.
What explains the similarity of the two curves?
A As costs rise growers need to get a higher price to increase output.
B At the lower prices each grower supplies more tomatoes.
C The profitability per unit is the same for all growers irrespective of output.
D Supply is not always influenced by price.
A
B
C
D
The diagram shows the supply curve for a good. What is the price elasticity of supply when the price rises from $10 to $12?
A 0.5
B 0.75
C 1.4
D 2.0
A
B
C
D
The diagram shows the global market for copper with an equilibrium point of X. Which point represents the new equilibrium after the copper producers’ costs increase and there is rapid global economic growth?
A
B
C
D
The diagram shows the demand curve for coffee in the US. Why did the quantity demanded move from Q1 to Q2?
A Coffee became cheaper.
B Incomes rose in the US.
C There was a successful advertising campaign by coffee retailers.
D The price of substitutes for coffee rose.
A
B
C
D
In an African country with large areas of tropical desert the price elasticity of demand for salt is highly inelastic. This will result in greater consumer expenditure on salt when price changes from P1 to P2. Which diagram illustrates this situation?
A
B
C
D
A newspaper reported that ‘The world market for coffee has returned to equilibrium’. Which situation supports this statement?
A A sequence of poor harvests resulted in shortages.
B Decreased transport costs led to a surplus of supply.
C Farmers matched demand by planting more coffee bushes.
D The price of coffee was fixed between producers.
A
B
C
D
The table shows the demand schedule for a good at different prices. The current market price for the good is $10. Following a 20% increase in price, what will be the change in the quantity demanded?
A – 60
B – 40
C +120
D +200
A
B
C
D
What can cause the supply curve for a product to shift to the right?
A an increase in demand for the product
B an increase in government subsidies to producers
C an increase in indirect taxes on the product
D an increase in the costs of production
A
B
C
D
A railway company increases ticket prices by 10% for travel between 06:00 and 09:00, causing a reduction in demand by 2%. After 09:00 it reduces ticket prices by 5%, resulting in a 7% increase in demand. What is the price elasticity of demand in response to these price changes?
A
B
C
D
There has been a movement upwards along the supply curve of a product. What is the most likely explanation for this?
A Consumer incomes have fallen.
B New technology has made the product cheaper to produce.
C The government has imposed a tax on the product.
D The price of a substitute has increased.
A
B
C
D
Price elasticity of demand (PED) measures the responsiveness of demand to a change in price. It can differ for different goods. For which good is the PED most elastic according to the table?
A
B
C
D
In the diagram, suppliers have set the price of a product at PS. Economic theory predicts that the equilibrium price of the product will rise to PE. What is the reason for this movement in price?
A Demand for the product will increase.
B No more of the product can be supplied.
C Some consumers are willing to pay higher prices.
D Suppliers are facing rising costs.
A
B
C
D
A government approved the construction of a new railway line connecting major cities. It would be built by a private company but be funded partly through taxation. It would create many jobs. People living on the route worried about the harm to their environment. Which concepts are directly involved in this statement?
A excess demand and public corporation
B government subsidies and perfect competition
C market system and income distribution
D private benefit and external cost
A
B
C
D
The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ?
A. elastic
B. perfectly elastic
C. unitarily elastic
D. inelastic.
A
B
C
D
A movement along the demand curve to the left may be caused by ?
A. a decrease in supply.
B. a rise in income
C. a fall in the number of substitute goods
D. a rise in the price of inputs
A
B
C
D
When excess demand occurs in an unregulated market, there is a tendency for ?
A. price to fall
B. quantity supplied to decrease.
C. price to rise
D. quantity demanded to increase
A
B
C
D
Which of the following is consistent with the law of supply ?
A. As the price of calculators rise, the quantity supplied of calculators decreases, ceteris paribus.
B. As the price of calculators calls the supply of calculators increases, ceteris paribus.
C. As the price of calculators rise, the quantity supplied of calculators increases, ceteris paribus.
D. As the price of calculators rise, the supply of calculators increases ceteris paribus.
A
B
C
D
If the demand for coffee decreases as income decreases, coffee is ?
A. an inferior good
B. a normal good
C. a complementary good
D. a substitute good
A
B
C
D
If demand is __________ then price cuts will _________ spending?
A. inelastic; increase
B. elastic; increase
C. elastic, decrease
D. none of the above
A
B
C
D
An increase in price all other things unchanged leads to ?
A. A shift in supply outwards
B. A shift in supply inwards
C. A contraction of supply
D. An extension of supply
A
B
C
D
Supply is likely to be more price elastic ?
A. In the short run rather than the long run
B. If factors of production are relatively immobile between industries
C. If there are very few producers
D. If it is easy to expand output
A
B
C
D
Which best describes a supply curve ?
A. The quantity consumers would like to buy in an ideal world
B. The quantity producers are willing and able to sell at each and every price all other things unchanged
C. The quantity producers are willing and able to sell at each and every income all other things unchanged
D. The quantity producers are willing and able to sell at each and every point in time all other things unchanged
A
B
C
D
An increase in the price of a complement for product A would ?
A. Shift demand for Product A outwards
B. Shift demand for product A inwards
C. Shift supply for product A outwards
D. Shift supply for product A inwards
A
B
C
D
If the price elasticity of demand is unit then a fall in price ?
A. Reduces revenue
B. Leaves revenue unchanged
C. Increase revenue
D. Reduces costs
A
B
C
D
Demand for a normal product may shift outwards if ?
A. Price decreases
B. The price of a substitute falls
C. The price of a complement rises
D. income falls
A
B
C
D
The price of computer chips used in the manufacture of personal computers has fallen. This will lead to _________ personal computer?
A. a decrease in the quantity supplied of
B. a decrease in the supply of
C. an increase in the quantity supplied of
D. an increase in the supply of
A
B
C
D
Which of the following will NOT cause a shift in the demand curve for compact discs ?
A. A change in wealth
B. A change in the price of compact discs
C. A change in income.
D. A change in the price of pre-recorded cassette tapes
A
B
C
D
Suppose the demand for good Z goes up when the price of good Y goes down. We can say that goods Z and Y are ?
A. perfect substitutes
B. complements
C. unrelated goods.
D. substitutes.
A
B
C
D
Demand curves are derived while holding constant:
A. incomes, tastes, and the price of other goods.
B. income, tastes, and the price of the good.
C. income and tastes
D. tastes and the price of other goods
A
B
C
D
What effect is working when the price of a good falls and consumers tend to buy it instead of other goods ?
A. The ceteris paribus effect
B. The diminishing marginal utility effect.
C. The substitution effect
D. The income effect
A
B
C
D
The law of demand implies that ?
A. as prices rise, demand decrease
B. as prices fall, quantity demanded increase
C. as prices fall demand increases
D. as prices rise, quantity demanded increases
A
B
C
D
If a 4% increase in price leads to a increase in the quantity supplied of 8% ?
A. Supply is price elastic
B. Supply is income elastic
C. Price elasticity of demand is -2
D. Price elasticity of supply is -2
A
B
C
D
