MCQs of Economics – Supply and Demand

The law of demand implies that:

The Setrite Corporation produce chairs. An economist working for the firm predicts that if people’s incomes rise next year, then the demand for our chairs will for our chairs will increase ceteris paribus The accuracy of the economist’s prediction depends on whether the chairs Setrite Produce:

What effect is working when the price of a good falls and consumers tend to buy it instead of other goods?

The quantity demanded of Pepsi has decreased. The best explanation for this is that:

Demand curves are derived while holding constant:

When the decrease in the price of one good causes the demand for another good to decrease, the goods are:

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:

If the demand for coffee decreases as income decreases, coffee is:

Which of the following will NOT cause a shift in the demand curve for compact discs?

Which of the following is consistent with the law of supply?

The price of computer chips used in the manufacture of personal computers has fallen. This will lead to ____ personal computer.

When excess demand occurs in an unregulated market, there is a tendency for:

An increase in aggregate demand if aggregate supply is totally inelastic will:

Market equilibrium exists when ____ at the prevailing price.

A movement along the demand curve to the left may be caused by:

The price elasticity of demand is the:

The price of apples falls by 5% and quantity demanded increases by 6% This means that demand is:

The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is:

If the cross-price elasticity of demand between two goods is negative, then the two goods are:

If the quantity demanded of beef increases by 5% when the price of chicken increase by 20% the cross-price elasticity of demand between beef and chicken is:

When the market operates without interference, price increases will distribute what is available to those who are willing and able to pay the most. This process is known as:

Which best describes a demand curve?

A fall in price:

Demand for a normal product may shift outwards if:

According to the law of diminishing utility:

If marginal utility is zero:

An increase in income should:

An increase in the price of a complement for product A would:

An increase in price all other things unchanged leads to:

If a product is a vablen good:

If a product is an inferior good:

Average income increase from Rs20,000 p.a to Rs 22,000 p.a Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct?

The price decrease from Rs 2,000 to Rs 1,800 Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct?

If the price elasticity of demand is unit then a fall in price.

If the cross elasticity of demand is -2:

The income elasticity is +2 and income increases by 20% sales were 5000 units, what will they be now?

The price elasticity of demand is a negative number this means:

Price increases from 10 to 12 pence and the price elasticity of demand is -0.5 The quantity demanded was 500 units. What will it be now?

if demand is price inelastic

For an inferior good:

For a normal good:

Which best describes a supply curve?

If a 4% increase in price leads to a increase in the quantity supplied of 8%

Supply is likely to be more price elastic:

A supply curve that starts at the origin has:

A contraction in supply occurs when:

An increase in the costs of production will:

An increase in price all other things unchanged leads to:

An increase in productivity should:

An increase in price from 25 pence to 30 pence leads to an increase in the quantity supplied from 40 units to 44 units. The price elasticity of supply is:

The price elasticity of supply is +4 The price increases by 15% sales were originally 200 units What will they be now?

A shif in aggregate supply is likely to:

Aggregate demand will increase if:

An increase in aggregate demand will have most effect on prices if:

Which of the following would increase aggregate demand?

Which of the following would decease aggregate demand?

Improved training of employees would?

Increase unemployment benefits and less incentive to work would:

Increased level consumption:

Increased levels of spending on imports:

The price elasticity of demand measures:

If demand is ____ then price cuts will _____ spending

The cross-price elasticity of demand measures how the quantity demanded of one good is related to consumer income

Positive cross elasticities suggest that goods are ____ and negative cross-elasticities that goods are:

A measurement showing how quantity demanded varies with income is the

inferior goods have ____ and luxury goods have ____

If your income doubles and the prices of the goods you buy double then your demand for these goods will likely:

Any price change can be decomposed into an income effect and a complementary effect

The income effect of a price increase of a normal good is to ____ of that good and the substitution effect is to ____ of that good

The opportunity cost of a student is

Economics assumes that people consume goods and services to achieve

The extra utility from consuming one more unit of a good is called

Adding up the quantities demanded of a good by different people facing the same price gives us the

Firms are assumed to ____ costs and to ____ profits

The increase in total cost when one more unit is produced is known as

Marginal revenue is the ____ when output is ____

Profits are maximized when:

If a firm is producing a level of output where marginal cost is greater than marginal revenue, it should increase output of maximize profits

If a firms wage costs increase this will cause _____ and ____

An upward shift in marginal cost ___ output and an upward shift in marginal revenue ____ output

A firm should close down if profits are zero

A firm that breaks even after all economic costs are paid is earning

A firm that makes profit in addition to normal profit is making

If both marginal cost and marginal revenue increase, a firm: