Question 1

Which of the following is true about the law of supply?

Accepted Answer

There is a direct relationship between price and quantity supplied.

Answer

There is an inverse relationship between price and quantity supplied.

Answer

Price has no effect on quantity supplied.

Answer

Supply is determined by consumer demand.

Question 2

Which of the following factors would most likely cause an increase in demand?

Accepted Answer

A decrease in the price of a complementary good.

Answer

An increase in the price of a substitute good.

Answer

An increase in production costs.

Answer

A decrease in consumer income.

Question 3

Which of the following will most likely cause an increase in the supply of a product?

Accepted Answer

Technological advancements that reduce production costs.

Answer

An increase in consumer demand for the product.

Answer

A decrease in the price of a substitute product.

Answer

An increase in government regulations on production.

Question 4

Which of the following is true about price elasticity of demand?

Accepted Answer

Price elasticity of demand measures how responsive quantity demanded is to a change in price.

Answer

Price elasticity of demand is equal to the slope of the demand curve.

Answer

Price elasticity of demand is always greater than 1.

Answer

Price elasticity of demand measures how responsive price is to a change in quantity demanded.

Question 5

Which of the following is considered a determinant of supply?

Accepted Answer

Input costs.

Answer

Consumer tastes and preferences.

Answer

Price of the product.

Answer

Consumer income.

Question 6

Which of the following is an example of a price floor?

Accepted Answer

Minimum wage laws.

Answer

Sales tax on a product.

Answer

Subsidies provided to producers.

Answer

Price ceilings on rent.

Question 7

Which of the following best describes a shortage in the market?

Accepted Answer

Quantity demanded exceeds quantity supplied at the current price.

Answer

Quantity supplied exceeds quantity demanded at the current price.

Answer

Price exceeds the maximum price set by the government.

Answer

There is no scarcity or imbalance in the market.

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