Unit 1: Demand and Supply Analysis - Practice Quiz

1 Economics is mainly concerned with the study of how people use

2 The basic economic problem arises because human wants are

3 Which branch of economics studies individual consumers and firms?

4 Which branch of economics studies the economy as a whole?

5 A positive economic statement is one that can be

6 Which statement is normative?

7 Demand refers to the quantity of a good that consumers are willing and able to

8 Which condition is necessary for a desire to become demand?

9 According to the law of demand, when price rises, quantity demanded usually

10 The demand curve generally slopes

11 An increase in consumer income generally increases demand for a

12 Which factor can directly affect the demand for a product?

13 According to the law of supply, when price rises, quantity supplied usually

14 The supply curve generally slopes

15 An improvement in production technology usually causes supply to

16 An increase in the cost of raw materials usually causes supply to

17 Market equilibrium occurs when

18 The price at which quantity demanded equals quantity supplied is called the

19 A change in the price of a good causes a movement

20 A change in consumer income usually causes the demand curve to

21 A city has funds to build either a public hospital or a sports complex, but not both. Which economic idea is illustrated by this choice?

22 Why does economics study how people make choices among alternative uses of resources?

23 An economist studies how a rise in the central bank's interest rate may affect national inflation and unemployment. This is mainly an example of:

24 Which question is primarily microeconomic?

25 Which statement is normative rather than positive?

26 Which statement can be tested using economic data without making a value judgment?

27 In economics, demand for a product refers to the quantity consumers:

28 A student wants a laptop but has no money or credit to purchase it. In demand analysis, this desire is:

29 If the price of a normal good falls, with other factors unchanged, what will usually happen?

30 A demand schedule shows that quantity demanded rises from 40 to 60 units when price falls from $10 to $8. This represents:

31 Tea and coffee are substitutes. If the price of coffee rises while other factors remain constant, what is likely to happen in the tea market?

32 If household income rises and restaurant meals are a normal good, which outcome is most likely?

33 Why does a higher market price generally encourage producers to offer more of a good?

34 A rise in the price of a product causes firms to expand production along their existing supply curve. This is called:

35 A new technology lowers the cost of producing smartphones. Assuming other factors are unchanged, the supply of smartphones will:

36 If a government imposes a per-unit tax on producers, what is the most likely immediate effect on supply?

37 Suppose demand is and supply is . What are the equilibrium price and quantity?

38 If the market price is below the equilibrium price, which condition is most likely to occur?

39 Which event causes a leftward shift of the demand curve for a normal good?

40 A drought reduces the harvest of wheat, while demand remains unchanged. What is the likely market result?

41 A city has a fixed budget and must choose between expanding a hospital and upgrading public transport. Which economic principle is most directly involved when the value of the forgone transport project is evaluated?

42 Why can economics analyze a decision even when no money changes hands?

43 A researcher estimates how a 10% increase in the minimum wage affects employment in one city while holding other factors constant. This is primarily an example of:

44 Which question is most clearly macroeconomic rather than microeconomic?

45 Which statement is normative rather than positive?

46 Which combination correctly classifies the statements? I. A price ceiling below equilibrium creates excess demand. II. Essential medicines should be affordable to everyone.

47 Which situation represents an increase in quantity demanded rather than an increase in demand for a product?

48 A consumer wants a luxury car but cannot afford it. In standard economic analysis, this desire is not counted as demand because demand requires:

49 A good has a downward-sloping demand curve, but a price increase raises total expenditure on it. Which inference is most justified?

50 Which observation would most plausibly represent a Giffen-good exception to the usual law of demand?

51 Coffee and tea are substitutes. If the price of coffee rises while income and other factors remain constant, the demand curve for tea will most likely:

52 A normal good experiences a fall in its own price and a simultaneous fall in consumers' incomes. Which outcome cannot be determined without additional information?

53 For an upward-sloping supply curve, a rise in the market price of the good, with all other factors unchanged, causes:

54 A firm can expand output only by using increasingly expensive inputs. Which explanation best supports an upward-sloping market supply curve in the long run?

55 A technological improvement lowers the unit cost of producing solar panels, while the market price remains unchanged. The most direct result is:

56 Suppose the government introduces a per-unit tax on producers while demand remains unchanged. In a standard supply-and-demand diagram, the supply curve will:

57 Market demand and supply are and . If the government sets a price floor of $25, what is the resulting surplus?

58 Market demand and supply are and . If demand increases by 20 units at every price, what are the new equilibrium price and quantity?

59 At the current market price, quantity demanded exceeds quantity supplied. In a competitive market with no price controls, the most likely adjustment is:

60 A drought reduces the supply of wheat, while consumers simultaneously become more willing to buy wheat products. What can be concluded unambiguously about equilibrium?