Demand and Supply: The Driving Forces of Market Equilibrium

Question 1

If the market is in equilibrium, what will occur if there is a decrease in supply?

Accepted Answer

Price will increase and quantity supplied will decrease

Answer

Price will decrease and quantity demanded will increase

Answer

Price will increase and quantity demanded will increase

Answer

Price will decrease and quantity supplied will increase

Question 2

If the price of a product increases, what is the typical response from suppliers?

Accepted Answer

Increase supply

Answer

Decrease supply

Answer

Maintain supply

Answer

Uncertain, as it depends on the specific market

Question 3

Which government policy can be used to establish a maximum price for a product?

Accepted Answer

Setting a maximum price for a product

Answer

Imposing a minimum wage

Answer

Providing subsidies to producers

Answer

Imposing a tax on consumers

Question 4

What is the term for the point where the demand curve and supply curve intersect?

Accepted Answer

Equilibrium point

Answer

Surplus point

Answer

Shortage point

Answer

Inelastic point

Question 5

What is the term used to describe the point where the supply and demand curves intersect?

Accepted Answer

Market equilibrium

Answer

Consumer surplus

Answer

Producer surplus

Answer

Deadweight loss

Question 6

A government-mandated price floor is set

Accepted Answer

Above the equilibrium price

Answer

Below the equilibrium price

Answer

Equal to the equilibrium price

Answer

Can vary depending on the market

Question 7

Which of the following is NOT a factor that influences the supply of a product?

Accepted Answer

Preferences of consumers

Answer

Number of producers in the market

Answer

State of technology

Answer

Cost of raw materials

Question 8

How does a technological advancement in the production process typically affect supply?

Accepted Answer

Increases supply

Answer

Decreases supply

Answer

Has no effect on supply

Answer

Unpredictable effect on supply

Question 9

Which of the following events could lead to a simultaneous decrease in both demand and supply?

Accepted Answer

An economic recession

Answer

Technological innovation in production

Answer

Change in consumer tastes and preferences

Answer

Government subsidies

Question 10

How is the price elasticity of demand related to consumer responsiveness to price changes?

Accepted Answer

Directly proportional

Answer

Inversely proportional

Answer

No relationship exists

Answer

U-shaped relationship

Question 11

Which of the following is an example of complementary goods?

Accepted Answer

Coffee and cream

Answer

Pizza and soda

Answer

Cars and bicycles

Answer

Apples and oranges

Question 12

What is the primary effect of a tax on producers on the market equilibrium?

Accepted Answer

Shifts the supply curve to the left

Answer

Shifts the demand curve to the right

Answer

Raises the market equilibrium price

Answer

Lowers the market equilibrium quantity

Question 13

The law of demand indicates that as price increases, quantity demanded:

Accepted Answer

Decreases

Answer

Increases

Answer

Stays the same

Answer

Fluctuates

Question 14

When the price ceiling is set below the equilibrium price, the result is:

Accepted Answer

Shortage

Answer

Surplus

Answer

No effect on the market

Answer

Increased quantity supplied

Question 15

The elasticity of demand measures the responsiveness of quantity demanded to:

Accepted Answer

Price changes

Answer

Income changes

Answer

Government policy shifts

Answer

Technological advancements

Question 16

Which of the following is NOT a type of elasticity?

Accepted Answer

Cross elasticity of supply

Answer

Price elasticity of demand

Answer

Income elasticity of demand

Answer

Arc elasticity of demand

Question 17

A perfectly elastic demand curve has:

Accepted Answer

A horizontal slope

Answer

A positive slope

Answer

A vertical slope

Answer

A negative slope

Question 18

In a market equilibrium, what is the relationship between quantity demanded and quantity supplied?

Accepted Answer

Equal

Answer

Not equal

Answer

Greater than

Answer

Less than

Question 19

If demand for a product increases, and supply remains unchanged, what will happen to the market price and quantity?

Accepted Answer

Price increases, quantity increases

Answer

Price decreases, quantity decreases

Answer

Price decreases, quantity increases

Answer

Price increases, quantity decreases

Question 20

Which of the following is NOT a determinant of the supply of a good?

Accepted Answer

Consumer preferences

Answer

Technology

Answer

Producer expectations

Answer

Government policies

Question 21

For a good with an elasticity of demand of -0.8, what will happen to quantity demanded if the price increases by 10%?

Accepted Answer

Decrease by 8%

Answer

Increase by 8%

Answer

Decrease by 12.5%

Answer

Increase by 12.5%

Question 22

What is a price ceiling?

Accepted Answer

A government-imposed maximum price for a good or service

Answer

A government-imposed minimum price for a good or service

Answer

A voluntary agreement among sellers to set a maximum price

Answer

A price set by the market forces of supply and demand

Question 23

What is the opportunity cost of a choice?

Accepted Answer

The benefit of the next best alternative that was given up

Answer

The monetary cost of making the choice

Answer

The time spent making the choice

Answer

The total cost of all possible alternatives

Question 24

What is the purpose of a subsidy?

Accepted Answer

To reduce the cost of production for producers

Answer

To increase the price of a good or service

Answer

To discourage the consumption of a good or service

Answer

To generate revenue for the government

Question 25

How do normal goods differ from inferior goods?

Accepted Answer

Normal goods are in higher demand as income increases, while inferior goods are in lower demand

Answer

Normal goods are less expensive than inferior goods

Answer

Inferior goods are more essential than normal goods

Answer

There is no difference between normal goods and inferior goods

Question 26

Which of the following factors does NOT influence the demand for a good?

Accepted Answer

Price of unrelated goods

Answer

Consumer tastes and preferences

Answer

Income levels

Answer

Price of the good itself

Question 27

At the equilibrium point in a market, we observe that:

Accepted Answer

Quantity supplied equals quantity demanded

Answer

Quantity supplied is less than quantity demanded

Answer

Quantity demanded is less than quantity supplied

Answer

There is a surplus

Question 28

A shift in consumer preferences towards a product is an example of a:

Accepted Answer

Demand shift

Answer

Supply shift

Answer

Change in equilibrium

Answer

Change in market structure

Question 29

The elasticity of demand measures the:

Accepted Answer

Responsiveness of quantity demanded to changes in price

Answer

Responsiveness of quantity supplied to changes in price

Answer

Relationship between price and quantity demanded

Answer

Relationship between price and quantity supplied

Question 30

A government-imposed price ceiling on a product will most likely result in:

Accepted Answer

A shortage

Answer

A surplus

Answer

No change in quantity supplied or demanded

Answer

Both a shortage and a surplus

Question 31

Government intervention in markets also comes with certain challenges. Which of the following is NOT a potential challenge?

Accepted Answer

Increased consumer satisfaction

Answer

Unintended consequences

Answer

Financial costs

Answer

Reduced efficiency in resource allocation

Question 32

Which of the following is NOT a key factor that influences demand?

Accepted Answer

Production costs

Answer

Price of the good

Answer

Consumer income

Answer

Consumer preferences

Question 33

According to the law of supply, what happens when the price of a good increases?

Accepted Answer

Supply tends to increase.

Answer

Supply tends to decrease.

Answer

Demand tends to decrease.

Answer

Demand tends to increase.

Question 34

Which of the following events would cause a shift to the left in the demand curve?

Accepted Answer

Decrease in consumer tastes for the good

Answer

Increase in population

Answer

Increase in the price of a substitute good

Answer

Improvement in technology

Question 35

Which of the following statements accurately defines elasticity of demand?

Accepted Answer

The responsiveness of quantity demanded to changes in price.

Answer

The responsiveness of quantity supplied to changes in price.

Answer

The relationship between price and quantity demanded.

Answer

The relationship between price and quantity supplied.

Question 36

Which of the following government interventions sets a maximum price below the equilibrium price?

Accepted Answer

Rent control

Answer

Minimum wage

Answer

Price gouging laws

Answer

Tariffs

Question 37

What is the primary purpose of a supply curve?

Accepted Answer

To demonstrate the relationship between price and quantity supplied.

Answer

To demonstrate the relationship between price and quantity demanded.

Answer

To illustrate market equilibrium.

Answer

To predict consumer behavior.

Question 38

Which of the following factors would cause a movement along the supply curve, rather than a shift?

Accepted Answer

Change in input costs

Answer

Change in technology

Answer

Change in consumer tastes

Answer

Change in government regulations

Question 39

What is the general relationship between demand and price, holding other factors constant?

Accepted Answer

Inversely proportional

Answer

Directly proportional

Answer

Unrelated

Question 40

During the summer, more people travel, which increases the demand for gasoline. How will this most likely affect the gasoline market?

Accepted Answer

The price of gasoline will go up.

Answer

The price of gasoline will go down.

Answer

The amount of gasoline available will go down.

Question 41

When the government sets a price floor above the equilibrium price, what is a likely outcome in the market?

Accepted Answer

Surplus and lower producer revenue

Answer

Increased consumer and producer surplus

Answer

Leftward shift in supply

Answer

No change in market equilibrium

Question 42

Which factor would most likely cause a decrease in demand for a product?

Accepted Answer

Price reduction for a competing product

Answer

Increase in consumer disposable income

Answer

Improvement in consumer tastes and preferences towards the product

Question 43

Identify the factor that would shift the supply curve to the left:

Accepted Answer

A natural disaster causing factory destruction

Answer

Introduction of government subsidies for producers

Answer

Increased number of producers entering the market

Answer

Advancements in technology that lower production costs

Question 44

What occurs in a market when demand surpasses supply?

Accepted Answer

Prices rise

Answer

Quantity demanded will contract

Answer

Prices fall

Answer

Quantity supplied will expand

Question 45

What term describes the point where supply and demand are in equilibrium?

Accepted Answer

Market equilibrium

Answer

Excess supply

Answer

Excess demand

Answer

Equilibrium price

Question 46

How does a reduction in government subsidies for producers affect a good's market supply?

Accepted Answer

Shifts the supply curve to the left

Answer

Shifts the demand curve to the right

Answer

No impact on the supply curve

Answer

Shifts the supply curve to the right

Question 47

Which characteristic describes a perfectly inelastic demand curve?

Accepted Answer

Quantity demanded remains constant despite price changes

Answer

Quantity demanded fluctuates significantly with price changes

Answer

Quantity demanded decreases moderately with price changes

Question 48

What happens when a government sets a price ceiling below the equilibrium price?

Accepted Answer

Excess demand occurs

Answer

Equilibrium remains unchanged

Answer

Excess supply occurs

Answer

Quantity supplied increases

Question 49

Which primary factor influences the quantity demanded for a product?

Accepted Answer

Consumer preferences

Answer

Government policies

Answer

Production methods

Question 50

What action can shift the supply curve rightwards?

Accepted Answer

Reduction in production expenses

Answer

Natural calamity

Answer

Government taxes

Answer

Increased competitors

Question 51

What market condition exists when quantity supplied surpasses quantity demanded?

Accepted Answer

Surplus

Answer

Disequilibrium

Answer

Shortage

Answer

Equilibrium

Question 52

What outcome occurs when a price ceiling is set below equilibrium price?

Accepted Answer

Shortage

Answer

Increased production

Answer

Stable market

Answer

Surplus

Question 53

Which type of elasticity indicates a large quantity change in response to a small price change?

Accepted Answer

Elastic

Answer

Zero elastic

Answer

Inelastic

Answer

Unit elastic

Question 54

A consumer with an income elasticity of demand greater than 1 is considered:

Accepted Answer

A luxury consumer

Answer

A necessity consumer

Answer

A neutral consumer

Answer

A budget-conscious consumer

Question 55

Which assumption is NOT part of the law of supply and demand?

Accepted Answer

Consumers have perfect market knowledge

Answer

Producers aim to maximize profits

Answer

Prices adjust rapidly to changes in supply and demand

Answer

The market is perfectly competitive