DEMAND AND SUPPLY QUIZ
1. Which of the following best describes the law of demand?
A. As price increases, quantity demanded increases.
B. As price increases, quantity demanded decreases.
C. As price decreases, quantity demanded decreases.
D. There is no relationship between price and quantity demanded.
Correct Answer: B
Rationale: The law of demand states that, all else equal, when the price of a good rises,
consumers will purchase less of it, and when the price falls, they will purchase more.
2. Which of the following best describes the law of supply?
A. As price increases, quantity supplied decreases.
B. As price increases, quantity supplied increases.
C. As price decreases, quantity supplied increases.
D. There is no relationship between price and quantity supplied.
Correct Answer: B
Rationale: The law of supply indicates that, ceteris paribus, as the price of a good rises,
producers are willing to supply more of it because higher prices generally allow for higher
profits.
3. A downward-sloping demand curve represents:
A. A direct relationship between price and quantity demanded.
B. An inverse relationship between price and quantity demanded.
C. A constant quantity demanded regardless of price.
D. Increasing demand as price increases.
Correct Answer: B
Rationale: A downward-sloping demand curve shows that as the price of a good falls,
consumers are willing to purchase more of it, reflecting an inverse relationship between price
and quantity demanded.
4. Which of the following is a determinant of demand?
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,A. Production technology
B. Input prices
C. Consumer income
D. Number of sellers
Correct Answer: C
Rationale: Consumer income is a major determinant of demand because it affects consumers’
purchasing power; in contrast, production technology and input prices are determinants of
supply, and the number of sellers influences market supply.
5. Which of the following is a determinant of supply?
A. Consumer tastes
B. Price of related goods
C. Production costs
D. Consumer income
Correct Answer: C
Rationale: Production costs (such as wages, raw materials, etc.) directly affect the ability and
willingness of firms to supply goods, making them a key determinant of supply.
6. A movement along the demand curve is caused by a change in:
A. Consumer income
B. Tastes and preferences
C. Price of the good itself
D. Prices of related goods
Correct Answer: C
Rationale: When the price of the good itself changes, the quantity demanded changes along the
existing demand curve. Changes in income, tastes, or prices of related goods shift the entire
demand curve.
7. A shift to the right in the demand curve indicates:
A. An increase in quantity demanded at every price.
B. A decrease in quantity demanded at every price.
C. A movement upward along the curve.
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, D. No change in demand.
Correct Answer: A
Rationale: A rightward shift of the demand curve means that at each price level, consumers are
willing to buy more of the good—this represents an increase in demand.
8. A movement along the supply curve is caused by a change in:
A. Technology
B. Input prices
C. Price of the good
D. Number of producers
Correct Answer: C
Rationale: A change in the good’s own price causes a movement along the supply curve.
Changes in technology, input prices, or the number of producers shift the entire supply curve.
9. A leftward shift of the supply curve indicates:
A. An increase in supply.
B. A decrease in supply.
C. No change in supply.
D. An increase in quantity supplied.
Correct Answer: B
Rationale: A leftward (or upward) shift of the supply curve signals that at every price, producers
are now supplying less of the good, meaning a decrease in supply.
10. Which factor would cause the supply curve to shift to the right?
A. An increase in production costs
B. A decrease in the number of sellers
C. Technological improvements
D. A decrease in market price
Correct Answer: C
Rationale: Technological improvements reduce production costs and increase efficiency,
allowing producers to supply more at every price, thus shifting the supply curve to the right.
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1. Which of the following best describes the law of demand?
A. As price increases, quantity demanded increases.
B. As price increases, quantity demanded decreases.
C. As price decreases, quantity demanded decreases.
D. There is no relationship between price and quantity demanded.
Correct Answer: B
Rationale: The law of demand states that, all else equal, when the price of a good rises,
consumers will purchase less of it, and when the price falls, they will purchase more.
2. Which of the following best describes the law of supply?
A. As price increases, quantity supplied decreases.
B. As price increases, quantity supplied increases.
C. As price decreases, quantity supplied increases.
D. There is no relationship between price and quantity supplied.
Correct Answer: B
Rationale: The law of supply indicates that, ceteris paribus, as the price of a good rises,
producers are willing to supply more of it because higher prices generally allow for higher
profits.
3. A downward-sloping demand curve represents:
A. A direct relationship between price and quantity demanded.
B. An inverse relationship between price and quantity demanded.
C. A constant quantity demanded regardless of price.
D. Increasing demand as price increases.
Correct Answer: B
Rationale: A downward-sloping demand curve shows that as the price of a good falls,
consumers are willing to purchase more of it, reflecting an inverse relationship between price
and quantity demanded.
4. Which of the following is a determinant of demand?
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,A. Production technology
B. Input prices
C. Consumer income
D. Number of sellers
Correct Answer: C
Rationale: Consumer income is a major determinant of demand because it affects consumers’
purchasing power; in contrast, production technology and input prices are determinants of
supply, and the number of sellers influences market supply.
5. Which of the following is a determinant of supply?
A. Consumer tastes
B. Price of related goods
C. Production costs
D. Consumer income
Correct Answer: C
Rationale: Production costs (such as wages, raw materials, etc.) directly affect the ability and
willingness of firms to supply goods, making them a key determinant of supply.
6. A movement along the demand curve is caused by a change in:
A. Consumer income
B. Tastes and preferences
C. Price of the good itself
D. Prices of related goods
Correct Answer: C
Rationale: When the price of the good itself changes, the quantity demanded changes along the
existing demand curve. Changes in income, tastes, or prices of related goods shift the entire
demand curve.
7. A shift to the right in the demand curve indicates:
A. An increase in quantity demanded at every price.
B. A decrease in quantity demanded at every price.
C. A movement upward along the curve.
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, D. No change in demand.
Correct Answer: A
Rationale: A rightward shift of the demand curve means that at each price level, consumers are
willing to buy more of the good—this represents an increase in demand.
8. A movement along the supply curve is caused by a change in:
A. Technology
B. Input prices
C. Price of the good
D. Number of producers
Correct Answer: C
Rationale: A change in the good’s own price causes a movement along the supply curve.
Changes in technology, input prices, or the number of producers shift the entire supply curve.
9. A leftward shift of the supply curve indicates:
A. An increase in supply.
B. A decrease in supply.
C. No change in supply.
D. An increase in quantity supplied.
Correct Answer: B
Rationale: A leftward (or upward) shift of the supply curve signals that at every price, producers
are now supplying less of the good, meaning a decrease in supply.
10. Which factor would cause the supply curve to shift to the right?
A. An increase in production costs
B. A decrease in the number of sellers
C. Technological improvements
D. A decrease in market price
Correct Answer: C
Rationale: Technological improvements reduce production costs and increase efficiency,
allowing producers to supply more at every price, thus shifting the supply curve to the right.
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