Applied Economics Quiz

What does the law of demand state?

• As price increases, quantity demanded increases

• As price decreases, quantity demanded decreases

• As price increases, quantity demanded decreases

• Price and quantity demanded are unrelated

Which of the following is a determinant of demand?

• Quantity supplied

• Input prices

• Consumer tastes and preferences

• Government subsidies

What happens when the price of a substitute good increases?

• Demand for the original good decreases

• Demand for the original good increases

• Supply of the original good decreases

• Quantity demanded remains unchanged

Which of the following best describes a demand curve?

• Upward sloping

• Vertical

• Downward sloping

• Horizontal

What is the result when quantity demanded exceeds quantity supplied?

• Surplus

• Equilibrium

• Shortage

• Price floor

What does a movement along the supply curve indicate?

• Change in supply

• Change in quantity supplied

• Change in demand

• Change in market equilibrium

Which factor would cause the supply curve to shift to the right?

• Increase in input prices

• Decrease in technology

• Increase in number of sellers

• Imposition of higher taxes

What is the equilibrium price?

• The price at which quantity supplied exceeds quantity demanded

• The price at which quantity demanded equals quantity supplied

• The lowest price in the market

• The price set by the government

What is the effect of a price ceiling below the equilibrium price?

• Surplus

• Shortage

• No effect

• Increase in supply

Which of the following is considered a normal good?

• Instant noodles

• Canned sardines

• Fast food combo meals

• Used clothing