Mcqs on Demand and Supply
1.When the price of a complementary good decreases, what happens to the demand for the main good? a) Increases b) Decreases c) Remains unchanged d) Depends on the income of consumers Answer: a) Increases
2. Which of the following is not a determinant of supply? a) Technology b) Input prices c) Government regulations d) Consumer preferences Answer: d) Consumer preferences
3. The market equilibrium price and quantity occur where: a) Demand equals supply b) Demand exceeds supply c) Supply exceeds demand d) Price is at its maximum Answer: a) Demand equals supply
3.In a perfectly competitive market, firms maximize profit by producing where: a) Marginal cost equals marginal revenue b) Average total cost is minimized c) Total revenue exceeds total cost d) Price is highest Answer: a) Marginal cost equals marginal revenue
4. A price ceiling set below the equilibrium price will result in: a) A shortage b) A surplus c) No effect on quantity traded d) Increase in consumer surplus Answer: a) A shortage
5. Which of the following is an example of a positive externality? a) Pollution from a factory b) Vaccination programs c) Noise pollution from construction d) Cigarette smoking Answer: b) Vaccination programs
6. A decrease in the supply of a good will result in: a) Higher price and lower quantity traded b) Lower price and higher quantity traded c) Higher price and higher quantity traded d) Lower price and lower quantity traded Answer: a) Higher price and lower quantity traded
7.When a monopolist maximizes profit, it produces where: a) Marginal cost equals price b) Marginal cost equals marginal revenue c) Average total cost is minimized d) Price equals average revenue Answer: b) Marginal cost equals marginal revenue
8. The Laffer curve illustrates the relationship between: a) Tax revenue and tax rates b) Consumer surplus and producer surplus c) Inflation and unemployment d) Price and quantity demanded Answer: a) Tax revenue and tax rates
9. A firm experiencing economies of scale will see its: a) Average total cost decrease as output increases b) Marginal cost decrease as output increases c) Average total cost increase as output increases d) Marginal cost increase as output increases Answer: a) Average total cost decrease as output increases
10. Which of the following is an example of a perfectly competitive market? a) Agricultural products b) Monopoly in utilities c) Oligopoly in automobile industry d) Monopolistic competition in fast food industry Answer: a) Agricultural products
11. Cross-price elasticity measures the responsiveness of the quantity demanded of one good to a change in the: a) Price of the same good b) Price of a substitute good c) Income of consumers d) Price of a complementary good Answer: b) Price of a substitute good
12. Which of the following is a characteristic of a monopolistic competition market structure? a) Many buyers and sellers b) Identical products c) Barriers to entry d) Differentiated products Answer: d) Differentiated products
13. When marginal cost is less than average total cost, what happens to average total cost? a) It decreases b) It increases c) It remains constant d) It equals marginal cost Answer: a) It decreases
14. In a perfectly competitive market in the long run, economic profits: a) Are always positive b) Are always zero c) Are always negative d) Depend on government regulations Answer: b) Are always zero
15. Which of the following is an example of a public good? a) Movie tickets b) Cable television c) National defense d) Fast food Answer: c) National defense
16. When a price floor is set above the equilibrium price, it leads to: a) A surplus b) A shortage c) No effect on quantity traded d) Increase in producer surplus Answer: a) A surplus
17. The long-run supply curve of a perfectly competitive firm is: a) Upward-sloping b) Downward-sloping c) Horizontal d) Vertical Answer: c) Horizontal
18. Which of the following is a characteristic of a monopoly? a) Many firms producing identical products b) Price taker c) One firm dominating the market d) Freedom of entry and exit Answer: c) One firm dominating the ma
