Practice Supply and Demand Questions
1. If the price of chocolate-covered peanuts increases from 40 cents to 50
cents, Dan will reduce his quantity demanded from 160 bags to 140 bags
due to:
a) The law of demand
b) The law of supply
c) A decline in his income
d) A change in his tastes and preferences
2. An increase in demand, all other things unchanged, will result in
a(n)_______ in price and a(n)_______ in quantity.
a) Increase; decrease
b) Decrease; decrease
c) Decrease; increase
d) Increase; increase
3. There is an increase in incomes. What happens in the market steak?
a) The equilibrium price falls, and the equilibrium quantity rises
b) The equilibrium price rises, and the equilibrium quantity falls
c) The equilibrium price and quantity rise
d) The equilibrium price and quantity fall
4. The price of oranges rises. What happens in the market for apples, which
are a substitute for oranges?
a) The equilibrium price falls, and the equilibrium quantity rises
b) The equilibrium price rises, and the equilibrium quantity falls
c) The equilibrium price and quantity rise
d) The equilibrium price and quantity fall
5. Other things being equal, the effect of a decrease in the price of Coca-Cola
would cause which of the following?
a) A rightward shift in the demand curve for Coca-Cola
b) A downward movement along the demand curve for Coca-Cola
c) A leftward shift in the demand curve for Coca-Cola
d) An upward movement along the demand curve for Coca-Cola
6. Assuming compact discs and cassettes are substitute goods, a decrease in
the price of cassettes will cause the demand curve for compact discs to:
a) Shift to the left as consumers switch from buying discs to cassettes
b) Shift to the right as consumers switch from buying discs to cassettes
c) Shift to the left as producers increase cassettes production and
reduce disc production
d) Remain unchanged since discs and cassettes are sold in separate
markets
7. If the price of potato chips increases, other things constants, demand for
potato-chip dip will:
a) Not change; only quantity demanded will change
b) Increase, because the goods are substitutes
c) Decrease, because the goods are substitutes
d) Decrease, because the goods are complements
e) Increase, because the goods are complements
8. Assuming that bus travel is an inferior good, and increase in consumer
income, other things being equal, will cause a(n):
a) Upward movement along the demand curve for bus travel
b) Downward movement along the demand curve for bus travel
c) Right ward shift in the demand curve for bus travel
d) Leftward shift in the demand curve for bus travel
9. If the current market price is above the equilibrium price, then:
a) The quantity demanded exceeds the quantity supplied
b) There will be a shortage
c) The quantity supplied will exceed the quantity demanded
d) The price will have to increase to establish equilibrium
e) Demand will shift to the left
10.If the current market price is below the equilibrium price, then:
a) A surplus of product will result
b) The quantity supplied will exceed the quantity demanded
c) The market supply curve will shift to the right
d) The quantity demanded will exceed the quantity supplied
e) The market demand curve will shift to the left
Answer key
1. A
2. D
3. C
4. C
5. B
6. A
7. D
8. D
9. C
10.D