Demand and Supply MCQs Quiz Multiple Choice Questions & Answers

1. A change in which of the following alters buying plans for cars but does NOT shift the demandcurve for cars?

1. a 10 percent decrease in the price of car insurance
2. a 20 percent increase in the price of a car
3. a 5 percent increase in peoples income
4. an increased preference for walking rather than driving

2. A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. This fact illustrates

1. a change in supply.
2. the law of demand.
3. the nature of an inferior good.
4. the law of supply.

3. Which of the following would NOT shift the demand curve for turkey?

1. a change in tastes for turkey
2. a decrease in the price of ham
3. an increase in income
4. a change in the price of a turkey

4. Which of the following is consistent with the law of demand?

1. A decrease in the price of a gallon of milk causes a decrease in the quantity of milk demanded.
2. An increase in the price of a soda causes a decrease in the quantity of soda demanded.
3. An increase in the price of a tape causes an increase in the quantity of tapes demanded.
4. A decrease in the price of juice causes no change in the quantity of juice demanded.

5. The law of demand states that

1. a decrease in the price of a good shifts the demand curve leftward.
2. other things remaining the same, the higher the price of a good, the smaller is the quantity demanded.
3. other thing remaining the same, the higher the price of a good, the larger is the quantity demanded.
4. an increase in the price of a good shifts the demand curve leftward.

6. Blank tapes and prerecorded tapes are substitutes in production. An increase in the price of a blank tape will cause

1. a decrease in the supply of prerecorded tapes.
2. an increase in the quantity supplied of prerecorded tapes but not in the supply.
3. a decrease in the quantity supplied of prerecorded tapes but not in the supply.
4. an increase in the supply of prerecorded tapes.

7. The law of demand implies that if nothing else changes, there is

1. a linear relationship between price of a good and the quantity demanded.
2. a positive relationship between the price of a good and the quantity demanded.
3. a negative relationship between the price of a good and the quantity demanded.
4. an exponential relationship between price of a good and the quantity demanded.

8. Which of the following will shift the supply curve for good X leftward?

1. a situation in which quantity demanded exceeds quantity supplied
2. an increase in the cost of the machinery used to produce X
3. a decrease in the wages of workers employed to produce X
4. a technological improvement in the production of X

9. The quantity supplied of a good or service is the quantity that a producer

1. actually sells at a particular price during a given time period.
2. should sell at a particular price during a given time period.
3. is willing to sell at a particular price during a given time period.
4. needs to sell at a particular price during a given time period.

10. Which of the following does NOT shift the supply curve?

1. an increase in the price of the good
2. a fall in the price of a substitute in production
3. a decrease in the wages of labor used in production of the good
4. a technological advance

11. Which of the following causes an increase in the quantity supplied of good X but NOT in the supply of good X?

1. an increase in the price of X
2. an increase in the price of good Y, a complement in the production of X
3. an improvement in the technology for producing X
4. a reduction in the price of resources used to produce X

12. Because of increasing marginal cost, most supply curves

1. are horizontal.
2. have a negative slope.
3. are vertical.
4. have a positive slope.

13. The law of demand implies that, other things remaining the same,

1. as the demand for cheeseburgers increases, the price of a cheeseburger will fall.
2. as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will decrease.
3. as income increases, the quantity of cheeseburgers demanded will increase.
4. as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will increase.

14. Which of the following pairs of goods are most likely substitutes?

1. compact discs and compact disc players
2. lettuce and salad dressing
3. cola and lemon lime soda
4. peanut butter and gasoline

15. The demand curve for a normal good shifts leftward if income ________ or the expected future price ________

1. decreases; falls
2. increases; rises
3. increases; falls
4. decreases; rises

16. Good A and good B are substitutes in production. The demand for good A increases so that theprice of good A rises. The increase in the price of good A shifts the

1. demand curve for good B rightward.
2. demand curve for good B leftward.
3. supply curve of good B rightward.
4. supply curve of good B leftward.

17. Wants, as opposed to demands,

1. depend on the price.
2. are the goods the consumer plans to acquire.
3. are the unlimited desires of the consumer
4. are the goods the consumer has acquired.

18. A reduction in the price of a good

1. does not shift the goods demand curve leftward but does decrease the quantity demanded.
2. shifts the goods demand curve leftward but does not decrease the quantity demanded.
3. shifts the goods demand curve leftward and also decreases the quantity demanded.
4. neither shifts the goods demand curve leftward nor decreases the quantity demanded.

19. The quantity supplied of a good is

1. equal to the difference between the quantity available and the quantity desired by allconsumers and producers.
2. the same thing as the quantity demanded at each price.
3. the amount that the producers are planning to sell at a particular price during a given time period.
4. the amount the firm would sell if it faced no resource constraints.

20. The demand for a good increases when the price of a substitute ________ and also increases whenthe price of a complement ________.

1. falls; falls
2. rises; falls
3. rises; rises
4. falls; rises

21. Most goods

1. have vertical demand curves.
2. have vertical supply curves.
3. are normal goods.
4. are complements to each other.

22. Inferior goods are those for which demand increases as

1. income decreases.
2. income increases.
3. the price of a substitute rises.
4. the price of a substitute falls.

23. Good A and good B are substitutes in production. The demand for good A decreases, which lowersthe price of good A. The decrease in the price of good A

1. increases the demand for good B.
2. decreases the demand for good B.
3. increases the supply of good B.
4. decreases the supply of good B.

24. An increase in the number of fast-food restaurants

1. increases the demand for substitutes for fast-food meals.
2. raises the price of fast-food meals.
3. increases the supply of fast-food meals.
4. increases the demand for fast-food meals.

25. A normal good is a good for which demand

1. increases when income increases.
2. decreases when population increases.
3. increases when population increases.
4. decreases when income increases.

26. An inferior good is a good for which demand

1. increases when population increases.
2. decreases when income increases.
3. decreases when population increases.
4. increases when income increases.

27. The law of demand states that the quantity of a good demanded varies

1. inversely with its price.
2. directly with population.
3. directly with income.
4. inversely with the price of substitute goods.

28. A supply curve differs from a supply schedule because a supply curve

1. is a graph and the supply schedule is a table.
2. holds the number of suppliers constant, whereas the supply schedule allows the number tovary.
3. holds resource prices constant, whereas the supply schedule allows them to vary.
4. represents one firm, whereas the supply schedule represents all firms in the market.

29. As the opportunity cost of a good decreases, people buy

1. more of that good but less of its complements.
2. less of that good and also less of its complements.
3. less of that good but more of its complements.
4. more of that good and also more of its complements.

30. When we say demand increases, we mean that there is a

1. movement to the right along a demand curve.
2. movement to the left along a demand curve.
3. leftward shift of the demand curve.
4. rightward shift of the demand curve.

31. A decrease in quantity demanded caused by an increase in price is represented by a

1. movement up and to the left along the demand curve.
2. movement down and to the right along the demand curve.
3. leftward shift of the demand curve.
4. rightward shift of the demand curve.

32. People come to expect that the price of a gallon of gasoline will rise next week. As a result,

1. next weeks supply of gasoline decreases.
2. the price of a gallon of gasoline falls today.
3. todays supply of gasoline increases.
4. todays demand for gasoline increases.

33. A drop in the price of a compact disc shifts the demand curve for prerecorded tapes leftward. From that you know compact discs and prerecorded tapes are

1. normal goods.
2. substitutes.
3. inferior goods.
4. complements.

34. People buy more of good 1 when the price of good 2 rises. These goods are

1. normal goods.
2. complements.
3. substitutes.
4. inferior goods.

35. By definition, an inferior good is a

1. normal substitute good.
2. good for which demand decreases when its price rises.
3. want that is not expressed by demand.
4. good for which demand decreases when income increases.

36. A substitute is a good

1. of higher quality than another good.
2. that is not used in place of another good.
3. that can be used in place of another good.
4. of lower quality than another good.

37. Which of the following influences peoples buying plans and varies moving along a demand curve?

1. preferences
2. the price of the good
3. income
4. the prices of related goods

38. Which of the following is NOT held constant while moving along a supply curve?

1. prices of resources used in production
2. expected future prices
3. the number of sellers
4. the price of the good itself

39. The opportunity cost of good A in terms of good B is equal to the

1. ratio of the price of good B to the price of good A.
2. ratio of the price of good A to the price of good B.
3. price of good A minus the price of good B.
4. price of good B minus the price of good A.

40. A decrease in the quantity supplied is represented by a

1. rightward shift in the supply curve.
2. movement down the supply curve.
3. leftward shift in the supply curve.
4. movement up the supply curve.

41. If the price of a good changes but everything else influencing suppliers planned sales remainsconstant, there is a

1. rotation of the initial supply curve around the initial price.
2. new supply curve that is to the right of the initial supply curve.
3. new supply curve that is to the left of the initial supply curve.
4. movement along the supply curve.

42. The law of demand implies that demand curves

1. shift leftward whenever the price rises.
2. shift rightward whenever the price rises.
3. slope down.
4. slope up.

43. A change in the price of a good

1. shifts the goods demand curve but does not cause a movement along it.
2. does not shift the goods demand curve but does cause a movement along it.
3. shifts the goods demand curve and also causes a movement along it.
4. neither shifts the goods demand curve nor causes a movement along it.

44. The law of demand states that, other things remaining the same, the higher the price of a good, the

1. smaller is the demand for the good.
2. smaller is the quantity of the good demanded.
3. larger is the quantity of the good demanded.
4. larger is the demand for the good.

45. If a producer can use resources to produce either good A or good B, then A and B are

1. substitutes in consumption.
2. complements in consumption.
3. complements in production.
4. substitutes in production.

46. Suppose people buy more of good 1 when the price of good 2 falls. These goods are

1. substitutes.
2. inferior.
3. normal.
4. complements.

47. The quantity demanded is

1. the amount of a good that consumers plan to purchase at a particular price.
2. independent of the price of the good.
3. independent of consumers buying plans.
4. always equal to the equilibrium quantity.

48. When economists speak of preferences as influencing demand, they are referring to

1. the availability of a good to all income classes.
2. directly observable changes in prices and income.
3. the excess of wants over the available supplies.
4. an individuals attitudes toward goods and services.

49. Over the past decade technological improvements that have lowered the cost of producing an automobile have increased

1. the demand but not the supply of automobiles.
2. both the supply and the demand for automobiles.
3. the supply but not the demand for automobiles.
4. neither the supply nor the demand for automobiles.

50. If a good is an inferior good, then purchases of that good will decrease when

1. the demand for it increases.
2. population increases.
3. income increases.
4. the price of a substitute rises.