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WorksheetsFinance Level 1- Demand and Supply
Total questions: 50
Worksheet time: 50mins
What is demand?
The quantity of a good that producers are willing to sell
The desire and ability of consumers to purchase goods
The total goods produced in a market
The government’s regulation of prices
What is supply?
The amount of a product consumers want
The total number of goods imported into a country
The quantity of a good that producers are willing to sell at different prices
The cost of production for a firm
Which statement best describes the law of demand?
As price increases, quantity demanded increases
As price increases, quantity demanded decreases
As income increases, price decreases
As demand increases, price decreases
Which statement best describes the law of supply?
As price increases, quantity supplied decreases
As price increases, quantity supplied increases
As demand increases, supply decreases
As income increases, supply decreases
Which of the following shows an inverse relationship?
Price and quantity supplied
Price and quantity demanded
Income and demand for normal goods
Production cost and supply
Which factor would most likely increase demand for a product?
Decrease in consumer income
Increase in the product's price
Increase in population
Decrease in consumer preference
A change in consumer tastes and preferences can:
Only decrease demand
Increase or decrease demand
Only increase supply
Not affect demand
If the price of a substitute good falls, the demand for the original good will likely:
Increase
Decrease
Stay the same
Double
An increase in consumers’ income will most likely:
Increase demand for inferior goods
Decrease demand for normal goods
Increase demand for normal goods
Have no effect on demand
If the price of complementary goods (like coffee and sugar) rises, the demand for coffee will likely:
Increase
Decrease
Stay constant
Double
Which of the following would likely increase supply?
Increase in cost of raw materials
Improved technology
Higher taxes on producers
Labor shortage
An increase in the number of sellers in a market will likely:
Increase supply
Decrease supply
Have no effect
Decrease demand
A rise in production costs usually causes supply to:
Increase
Decrease
Stay constant
Become unpredictable
A government subsidy (financial assistance provided by the government to individuals, businesses, or industries to help reduce their costs or encourage certain activities) to farmers would:
Decrease supply
Increase supply
Have no effect
Increase demand
A change in demand occurs when:
Price of the good changes
A non-price factor like income or taste changes
Supply decreases
Market equilibrium changes
A change in quantity demanded occurs when:
Price changes
Consumer income changes
Tastes change
New technology develops
A change in supply means:
A. A movement along the supply curve
B. The entire supply curve shifts
C. No change in production
D. Change in price only
A change in quantity supplied means:
The supply curve shifts
Producers respond to a price change
A new supplier enters the market
The government changes tax policy
Which of these would cause a shift in both demand and supply?
Change in price
Change in technology
Change in population
Change in market expectations
Market equilibrium occurs when:
When quantity demanded equals quantity supplied.
When supply exceeds demand.
When demand exceeds supply.
When prices are fixed by the government.
If demand increases and supply stays the same, the equilibrium price will:
Decrease
Increase
Stay the same
Be unpredictable
If supply increases while demand stays constant, price will likely:
Increase
Stay constant
Decrease
Double
A surplus occurs when:
Demand exceeds supply
Price is below equilibrium
Supply exceeds demand
Market clears
A shortage occurs when:
the quantity demanded is greater than the quantity supplied
the quantity supplied is greater than the quantity demanded
the market is in equilibrium
there is no demand for the product
Competition in a market tends to:
Raise prices
Lower quality
Encourage efficiency and innovation
Reduce consumer choice
The profit motive encourages businesses to:
Produce goods consumers want
Ignore consumer preferences
Avoid risks
Keep prices artificially high
Which of the following is a result of strong market competition?
Monopoly formation
Lower prices and better quality
Reduced supply
Higher taxes
A monopoly market has:
Many sellers
One seller
No sellers
Few sellers
When profits increase, producers usually:
Reduce supply
Leave the market
Increase production
Raise taxes
What happens at market equilibrium?
Quantity demanded equals quantity supplied.
Prices keep changing.
Demand is higher than supply.
Supply exceeds demand.
When there is a surplus:
Supply equals demand.
Quantity supplied exceeds quantity demanded.
Prices rise.
Demand increases.
Describe the situation on the market when there is a shortage. What could cause it and what happens?
What will happen to the price in a shortage?
It will rise.
It will fall.
It will stay constant.
It will become zero.
The profit motive encourages businesses to:
Provide goods at a loss.
Produce goods people want to buy.
Avoid competition.
Limit production.
Which of the following best describes competition?
Businesses working together to fix prices.
Rivalry among sellers to attract customers.
A monopoly.
Government control of prices.
How does competition benefit consumers?
Which of the following is an example of competition?
Two restaurants offering discounts to attract more customers.
A single store in a small town.
A government-run monopoly.
A company buying out all rivals.
What motivates producers to enter a market?
Government regulations.
Profit potential.
High taxes.
Fear of risk.
If a new technology makes production cheaper, the result will likely be:
Decrease in supply.
Increase in supply and lower prices.
Price increase.
Shortage of goods.
In a competitive market, what happens if prices are too high?
The interaction of demand and supply determines:
Government policies.
Market price.
Consumer income.
Production costs.
What happens when demand increases but supply stays the same?
Price decreases.
Price increases.
Quantity decreases.
Both stay constant.
If the government sets a price ceiling below the equilibrium, what occurs?
Surplus.
Shortage.
Market balance.
No effect.
If the government sets a price floor above the equilibrium, what occurs?
Shortage.
Surplus.
Market balance.
No effect.
Producers increase output when:
Prices rise.
Prices fall.
Demand decreases.
Costs rise.
Which market force drives innovation and efficiency?
Competition.
Monopoly power.
Government regulation.
High taxes.
Profit is the difference between:
Revenue and costs.
Price and demand.
Supply and quantity.
Exports and imports.
If firms earn high profits, new firms will likely:
Leave the market.
Enter the market.
Reduce output.
Increase prices.
Which of the following best represents the interaction of market forces?
Price changes based on demand and supply.
Prices set only by the government.
No effect of consumers on prices.
Sellers always control the market.
In a perfectly competitive market, prices are determined by:
One dominant buyer
Government regulation
Interaction of all buyers and sellers
Individual sellers
