Understanding Supply and Demand

What happens to the quantity demanded of a good when its price decreases, assuming all other factors remain constant?

• It increases

• It decreases

• It remains the same

• It becomes zero

Which of the following is a factor that can cause a shift in the demand curve?

• Change in the price of the good

• Change in consumer income

• Change in the quantity supplied

• Change in the price of inputs

If the supply of a product increases while the demand remains constant, what is likely to happen to the equilibrium price?

• It increases

• It decreases

• It remains the same

• It becomes zero

What is the term used to describe the responsiveness of quantity demanded to a change in price?

• Price elasticity of supply

• Price elasticity of demand

• Cross elasticity of demand

• Income elasticity of demand

Which of the following would cause a movement along the supply curve for a good?

• A change in the price of the good

• A change in technology

• A change in the number of suppliers

• A change in government regulations

If a product has many close substitutes, how is its price elasticity of demand likely to be described?

• Inelastic

• Elastic

• Perfectly inelastic

• Unitary elastic

What is the effect on the supply curve if there is an improvement in production technology?

• The supply curve shifts to the left

• The supply curve shifts to the right

• There is a movement up along the supply curve

• There is a movement down along the supply curve

Which of the following is NOT a determinant of demand?

• Consumer preferences

• Price of related goods

• Production costs

• Consumer income

What is the term for a situation where the quantity supplied is greater than the quantity demanded?

• Shortage

• Surplus

• Equilibrium

• Disequilibrium

If the government imposes a price ceiling below the equilibrium price, what is the likely outcome?

• Surplus

• Shortage

• No effect

• Increase in supply