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Supply and Demand Trivia Quiz

This quiz tests your knowledge of supply and demand, at least the basic concepts. "Ceteris paribus" means "other things equal".

A multiple-choice quiz by moijer. Estimated time: 6 mins.

Author
moijer

Time
6 mins

Type
Multiple Choice

Quiz #
296,261

Updated
Dec 03 21

# Qns
10

Difficulty
Difficult

Avg Score
5 / 10

Plays
1371

Last 3 plays: Guest 174 (1/10), Guest 174 (3/10), Guest 71 (5/10).

One at a Time - Single Page - Timed Game

Question 1 of 10

1. If the price of a normal good increases (ceteris paribus), what will happen to its demand curve? Hint

It will not shift.

It will shift to the right.

It will shift to the left.

Cannot be determined.

NEXT>

Question 2 of 10

2. What will an increase in income do to the demand curve of an inferior good (ceteris paribus)? Hint

Cannot be determined.

It will shift to the right.

It will shift to the left.

It will not shift.

NEXT>

Question 3 of 10

3. What will an increase in a price of a normal good do to its supply curve (ceteris paribus)? Hint

It will not shift.

It will shift to the right.

It will shift to the left.

Cannot be determined.

NEXT>

Question 4 of 10

4. Complete the statement: If supply decreases (ceteris paribus), the equilibrium price will ___ and the equilibrium quantity will ___. Hint

increase; decrease

decrease; increase

increase; increase

decrease; decrease

NEXT>

Question 5 of 10

5. Which of the following increases the demand of a normal good (ceteris paribus)? Hint

higher income

increase in the price of a complement good

decrease in its own price

decrease in the price of a substitute good

NEXT>

Question 6 of 10

6. The price elasticity of demand (PED) of Good X is 2.5. Good X is thus _____ . Hint

inelastic

none of the above

unit elastic

elastic

NEXT>

Question 7 of 10

7. If the cross elasticity of demand (CED) between goods X and Y is negative, what is probably the relation between X and Y? Hint

They are substitute goods.

They are complement goods.

They are production substitutes.

They are independent goods.

NEXT>

Question 8 of 10

8. A surplus occurs when Hint

the quantity supplied is greater than the quantity demanded.

the quantity demanded is equal to the quantity supplied.

the quantity demanded is greater than the quantity supplied.

the price of the good decreases.

NEXT>

Question 9 of 10

9. Which of the following lowers the equilibrium price (ceteris paribus)? Hint

increase in the production cost

increase in own price

increase in the price of a substitute good

increase in the price of a complement good

NEXT>

Question 10 of 10

10. If one wishes to increase the total revenue for an inelastic good, what must he do? Hint

He must decrease its price.

The correct answer cannot be determined from the given information.

He cannot raise the total revenue by changing the price.

He must increase its price.

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Most Recent Scores

Oct 30 2024 : Guest 174: 1/10
Oct 25 2024 : Guest 174: 3/10
Oct 12 2024 : Guest 71: 5/10
Sep 18 2024 : Guest 69: 2/10

Score Distribution

Quiz Answer Key and Fun Facts

1. If the price of a normal good increases (ceteris paribus), what will happen to its demand curve?

Answer: It will not shift.

A change in price is represented by a movement along the demand curve, not by a demand curve shift. The quantity demanded (not the demand itself) will decrease due to the price increase.

2. What will an increase in income do to the demand curve of an inferior good (ceteris paribus)?

Answer: It will shift to the left.

An increase in income decreases the demand for an inferior good (a good whose demand is inversely related to the change in income); thus, it shifts its demand curve to the left.

3. What will an increase in a price of a normal good do to its supply curve (ceteris paribus)?

Answer: It will not shift.

A change in price is represented by a movement along the supply curve, not by a supply curve shift. The quantity supplied (not the supply itself) will increase due to the price increase.

4. Complete the statement: If supply decreases (ceteris paribus), the equilibrium price will ___ and the equilibrium quantity will ___.

Answer: increase; decrease

If the supply decreases, the supply curve shifts to the left and thus increases the equilibrium price and decreases the equilibrium quantity. A decrease in equilibrium price and an increase in equilibrium quantity will result from a supply increase in which the supply curve will shift to the right. It is impossible that both will increase or decrease (ceteris paribus).

5. Which of the following increases the demand of a normal good (ceteris paribus)?

Answer: higher income

A higher income increases the demand of a normal good. A decrease in its price increases the quantity demanded and not the demand itself. An increase in the price of a complement good and a decrease in the price of a substitute good decreases the demand of the good.

6. The price elasticity of demand (PED) of Good X is 2.5. Good X is thus _____ .

Answer: elastic

Good X is elastic because the absolute value of the PED of X is 2.5, which is greater than one. It is inelastic if the absolute value of the PED is less than 1, and unit elastic if it is equal to 1.

7. If the cross elasticity of demand (CED) between goods X and Y is negative, what is probably the relation between X and Y?

Answer: They are complement goods.

If X and Y are complement goods, then as the price of X increases, the demand for Y decreases; thus, the CED between X and Y is negative. If X and Y are substitute goods, then as the price of X increases, the demand for Y increases; thus, the CED between X and Y is positive. If they are independent goods, the price of one does not affect the demand of the other; thus, the CED is zero. If they are production substitutes, the CED will not be affected.

8. A surplus occurs when

Answer: the quantity supplied is greater than the quantity demanded.

If the quantity demanded is equal to the quantity supplied, then there is equilibrium. If the quantity demanded is greater than the quantity supplied (which results when the price of the good is less than the equilibrium price), then a shortage occurs. A surplus occurs when the quantity supplied is greater than the quantity demanded.

9. Which of the following lowers the equilibrium price (ceteris paribus)?

Answer: increase in the price of a complement good

The equilibrium price will decrease if either supply increases or demand decreases. An increase in the price of a complement good decreases the demand. An increase in the production cost decreases the supply; an increase in the price of a substitute good increases the demand. An increase in own price does not affect the demand and supply.

10. If one wishes to increase the total revenue for an inelastic good, what must he do?

Answer: He must increase its price.

He must increase the price of the inelastic good to increase the total revenue. If the good is elastic, he must decrease its price to increase the total revenue. If the good is unit elastic, he cannot raise the total revenue by changing the price.

I hope you enjoyed this quiz.

Source: Author moijer

This quiz was reviewed by FunTrivia editor gtho4 before going online.
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