Supply And Demand - Practice Quiz
Supply and demand affects the amount of a commodity, product, or service available and the desire of buyers for it, considered as factors regulating its price. This is the major market driver and hence necessary to know about.
Questions and Answers
- 1.
A group of people buying and selling goods or services. This is the definition for:
- A.
Demand
- B.
Equilibrium
- C.
Market
- D.
Supply
Correct Answer
C. MarketExplanation
The correct answer is "Market" because a market refers to a group of people who engage in the buying and selling of goods or services. It is a place where buyers and sellers come together to exchange products or services based on their needs and preferences. In a market, the forces of supply and demand interact to determine prices and quantities of goods or services traded.Rate this question:
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- 2.
The desire to own a product and the ability/ willingness to pay for it. This is the definition for:
- A.
Supply
- B.
Elasticity
- C.
Demand
- D.
Market
Correct Answer
C. DemandExplanation
Demand refers to the desire or need of consumers to own a particular product or service, along with their willingness and ability to pay for it. It represents the quantity of a product or service that consumers are willing to buy at a given price. In other words, demand reflects the relationship between price and quantity demanded, indicating how much consumers are willing to purchase at different price levels.Rate this question:
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- 3.
With regard to demand, a change in price of a product/service results in movement along the curve.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
A change in price of a product/service leads to movement along the demand curve because price is one of the key factors that affects the quantity demanded. When the price of a product/service increases, the quantity demanded usually decreases, leading to a movement upwards along the demand curve. Conversely, when the price decreases, the quantity demanded usually increases, resulting in a movement downwards along the demand curve. Therefore, it is true that a change in price of a product/service results in movement along the curve.Rate this question:
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- 4.
In the Law Of Supply an increase in price results in:
- A.
Decrease of quantity supplied
- B.
Increase of quantity supplied
Correct Answer
B. Increase of quantity suppliedExplanation
An increase in price results in an increase in the quantity supplied according to the Law of Supply. This means that as the price of a good or service increases, producers are willing to supply more of it to the market. This is because higher prices incentivize producers to allocate more resources and invest in the production of the good, leading to an increase in the quantity supplied.Rate this question:
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- 5.
The supply curve shows the relationship of quantity and price demanded.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The demand curve actually shows the relationship of quantity and price demanded.Rate this question:
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- 6.
What occurs when quantity supplied is greater than quantity demanded at ruling price?
- A.
Excess Demand
- B.
Equilibrium Price
- C.
Comparative Static Analysis
- D.
Excess Supply
Correct Answer
D. Excess SupplyExplanation
When quantity supplied is greater than quantity demanded at the ruling price, it creates a situation called "excess supply." This means that there is an oversupply of the product in the market, and sellers are unable to sell all of their goods. As a result, they may be forced to lower the price in order to stimulate demand and clear the excess supply. This imbalance in supply and demand can lead to a decrease in prices and potentially affect the profitability of producers.Rate this question:
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- 7.
When consumer income rises what type of good decreases in demand?
- A.
Inferior
- B.
Normal
Correct Answer
A. InferiorExplanation
When consumer income rises, the demand for inferior goods decreases. Inferior goods are those for which demand decreases as consumer income increases. This is because as consumers have more disposable income, they tend to switch to higher quality or more expensive alternatives, leading to a decrease in demand for inferior goods.Rate this question:
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- 8.
Which 2 of the following would be considered to be normal goods?
- A.
TV/ Radio
- B.
Mobile Phone
- C.
Public Transport
- D.
Bargain Goods
Correct Answer(s)
A. TV/ Radio
B. Mobile pHoneExplanation
TV/Radio and Mobile Phone would be considered normal goods because they are both products that people typically purchase more of as their income increases. As people's income rises, they have more disposable income to spend on luxury items like TVs, radios, and mobile phones. Therefore, the demand for these goods tends to increase with higher income levels, making them normal goods. On the other hand, Public Transport and Bargain Goods are not normal goods as their demand does not necessarily increase with higher income levels.Rate this question:
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- 9.
The Law Of Demand helps to explain social behavior.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The Law Of Demand actually helps to explain economic behavior.Rate this question:
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- 10.
The _________ is the price where supply of quantity equals quantity demanded
Correct Answer
Equilibrium
equilibrium
equalibrium
equalibreamExplanation
The correct answer is "Equilibrium." In economics, equilibrium refers to the point where the quantity of a good or service supplied is equal to the quantity demanded. At this price, there is no shortage or surplus in the market, and both buyers and sellers are satisfied. The other options, "equilibrium," "equalibrium," and "equalibream," are misspellings and do not accurately represent the concept.Rate this question:
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Current Version
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Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Mar 31, 2015Quiz Created by
Dwessler
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