Economics: Demand and Supply Quiz

What is the most fundamental and powerful economic tool?

• Excise Taxes

• Market Equilibrium

• Elasticity of Demand

• Demand and Supply

Why do hotel rooms in Langkawi cost more in November than July?

• Increase in demand due to tourist season

• Change in technology

• Decrease in supply due to maintenance work

• Government intervention with price floor

What does the Law of Demand state?

• The quantity demanded is inversely related to its price

• The quantity demanded is directly related to its price

• People will buy more of a product at a lower price than at a higher price

• People will buy less of a product at a lower price than at a higher price

What does a decrease in the price of an alternative good result in?

• Increase in demand for the good

• Decrease in demand for the good

• Increase in supply of the good

• Decrease in supply of the good

What is the impact of a price ceiling imposed by the government?

• Increases equilibrium prices

• Creates shortages in the market

• Creates excess supply in the market

• Reduces equilibrium quantities

What is the tool used to measure the responsiveness of demand and supply?

• Quantity Restrictions

• Excise Taxes

• Market Equilibrium

• Elasticity

What does the Law of Supply state?

• The quantity supplied is inversely related to its price

• The quantity supplied is inversely related to the demand

• The quantity supplied is usually directly related to its price

• The quantity supplied is directly related to the demand

What is the result of an excise tax on a specific good?

• Increase in equilibrium prices and reduce equilibrium quantities

• Decrease in equilibrium prices and increase equilibrium quantities

• Creates shortages in the market

• Creates excess supply in the market

What does a more efficient technology result in?

• Reduction in production costs and increase in supply

• Increase in production costs and decrease in supply

• Increase in demand for the good

• Decrease in demand for the good

What is the impact of changing in the number of producers on supply?

• Decrease in supply of the good

• Increase in supply of the good

• Increase in demand for the good

• Decrease in demand for the good