1. Question: What is “demand” in economics?
A) The quantity of a product consumers are willing to buy at a given price and time.
B) The quantity of a product producers are willing to supply at a given price and time.
C) The quantity of a product available in the market for purchase.
D) The quantity of a product that is stored in warehouses for future use.
Answer: A) The quantity of a product consumers are willing to buy at a given price and time.
2. Question: The law of demand states that:
A) There is a direct relationship between price and quantity demanded, ceteris paribus.
B) There is an inverse relationship between price and quantity demanded, ceteris paribus.
C) The quantity demanded remains constant regardless of changes in price.
D) There is no relationship between price and quantity demanded.
Answer: B) There is an inverse relationship between price and quantity demanded, ceteris paribus.
3. Question: Which of the following is NOT a determinant of demand?
A) Price of the product.
B) Income of the consumers.
C) Price of related goods.
D) Cost of production.
Answer: D) Cost of production.
4. Question: When there is an increase in consumers’ income and the demand for a product decreases, the product can be classified as:
A) Normal good.
B) Inferior good.
C) Giffen good.
D) Luxury good.
Answer: B) Inferior good.
5. Question: If the price of smartphones decreases and, as a result, the demand for smartphone cases increases, what type of relationship exists between smartphones and smartphone cases?
A) Complementary goods.
B) Substitute goods.
C) Independent goods.
D) Inferior goods.
Answer: A) Complementary goods.
6. Question: When the price of a product increases, and its demand remains unchanged, what type of demand is being exhibited?
A) Inelastic demand.
B) Elastic demand.
C) Unitary demand.
D) Perfectly elastic demand.
Answer: A) Inelastic demand.
7. Question: Which of the following factors can cause a shift in the demand curve?
A) Change in the price of the product.
B) Change in consumer preferences.
C) Change in the price of complementary goods.
D) Change in the price of substitute goods.
Answer: B) Change in consumer preferences.
8. Question: The concept of “utility” in demand theory refers to:
A) The total revenue earned by a firm.
B) The satisfaction or benefit consumers derive from consuming a product.
C) The quantity of a product that consumers are willing to purchase.
D) The difference between total revenue and total cost.
Answer: B) The satisfaction or benefit consumers derive from consuming a product.
9. Question: If the price of a product increases from $10 to $15, and the quantity demanded decreases from 100 units to 80 units, what is the price elasticity of demand?
A) 0.5
B) 1.0
C) 1.5
D) 2.0
Answer: C) 1.5
10. Question: A perfectly elastic demand curve is represented as:
A) A vertical straight line.
B) A horizontal straight line.
C) An upward-sloping curve.
D) A downward-sloping curve.
Answer: B) A horizontal straight line.
11. Question: Which of the following goods is likely to have the most price inelastic demand?
A) Luxury goods.
B) Necessity goods.
C) Normal goods.
D) Giffen goods.
Answer: B) Necessity goods.
12. Question: If the cross-price elasticity of demand between two goods is positive, it indicates that they are:
A) Complementary goods.
B) Substitute goods.
C) Normal goods.
D) Inferior goods.
Answer: B) Substitute goods.
13. Question: If the demand for good X is highly price elastic, what happens to total revenue when the price of good X increases?
A) Total revenue increases.
B) Total revenue decreases.
C) Total revenue remains unchanged.
D) It depends on the income of consumers.
Answer: B) Total revenue decreases.
14. Question: Which of the following is NOT a method to measure elasticity of demand?
A) Price elasticity of demand.
B) Income elasticity of demand.
C) Cross-price elasticity of demand.
D) Supply elasticity of demand.
Answer: D) Supply elasticity of demand.
15. Question: An increase in the price of sugar will have the greatest impact on the demand for which of the following goods?
A) Ice cream.
B) Salt.
C) Tea.
D) Bicycles.
Answer: A) Ice cream.
16. Question: If the price of a good is artificially kept above its market equilibrium price, what is the likely outcome in the market?
A) An increase in supply.
B) A decrease in demand.
C) A surplus of the product.
D) A shortage of the product.
Answer: C) A surplus of the product.
17. Question: If the price of a product is below its equilibrium price, what is likely to happen in the market?
A) An increase in supply.
B) A decrease in demand.
C) A surplus of the product.
D) A shortage of the product.
Answer: D) A shortage of the product.
18. Question: The point where the demand and supply curves intersect is known as:
A) The equilibrium price.
B) The market price.
C) The fixed price.
D) The reserve price.
Answer: A) The equilibrium price.
19. Question: The situation where the quantity demanded is exactly equal to the quantity supplied in the market is referred to as:
A) Market failure.
B) Equilibrium.
C) Disequilibrium.
D) Surplus.
Answer: B) Equilibrium.
20. Question: Which of the following is an example of a non-price determinant of demand?
A) Change in the price of the product.
B) Change in consumer preferences.
C) Change in the price of related goods.
D) Change in income.
Answer: D) Change in income.
21. Question: “Price ceiling” is a government-imposed maximum price set:
A) Below the equilibrium price.
B) Above the equilibrium price.
C) At the equilibrium price.
D) Regardless of the equilibrium price.
Answer: A) Below the equilibrium price.
22. Question: Which of the following is an example of a “normal good”?
A) Public transportation.
B) Ramen noodles.
C) Used clothing.
D) Inferior goods.
Answer: A) Public transportation.
23. Question: An increase in the price of petrol (gas
oline) is likely to have the most significant impact on the demand for which of the following goods?
A) Bicycle tires.
B) Scooters.
C) Airline tickets.
D) Smartphones.
Answer: A) Bicycle tires.
24. Question: The price elasticity of demand for a product is measured as -1.2. This means that the demand is:
A) Price elastic.
B) Price inelastic.
C) Unitary elastic.
D) Perfectly elastic.
Answer: A) Price elastic.
25. Question: The demand curve for a product is a graphical representation of the relationship between:
A) Price and quantity supplied.
B) Price and quantity demanded.
C) Price and income.
D) Price and profit.
Answer: B) Price and quantity demanded.
26. Question: Which of the following is an example of a complementary good?
A) Tea and coffee.
B) Butter and margarine.
C) Cars and bicycles.
D) Pens and pencils.
Answer: C) Cars and bicycles.
27. Question: Which of the following is a measure of responsiveness of quantity demanded to changes in income?
A) Cross-price elasticity of demand.
B) Income elasticity of demand.
C) Price elasticity of demand.
D) Demand elasticity.
Answer: B) Income elasticity of demand.
28. Question: The demand for a good is said to be price inelastic if the price elasticity of demand is:
A) Less than 1.
B) Greater than 1.
C) Equal to 1.
D) Zero.
Answer: A) Less than 1.
29. Question: If the price elasticity of demand for a product is -0.5, what happens to total revenue when the price of the product increases?
A) Total revenue increases.
B) Total revenue decreases.
C) Total revenue remains unchanged.
D) It depends on the income of consumers.
Answer: A) Total revenue increases.
30. Question: The degree of necessity of a good affects its price elasticity of demand. Which of the following goods is likely to have the most price inelastic demand?
A) Smartphones.
B) Designer handbags.
C) Bread.
D) Luxury watches.
Answer: C) Bread.
31. Question: Which of the following is a characteristic of perfectly elastic demand?
A) The demand curve is horizontal.
B) The demand curve is vertical.
C) The demand curve is upward-sloping.
D) The demand curve is downward-sloping.
Answer: A) The demand curve is horizontal.
32. Question: If the price of a product increases from $10 to $15, and the quantity demanded decreases from 100 units to 80 units, what is the price elasticity of demand?
A) 0.5
B) 1.0
C) 1.5
D) 2.0
Answer: C) 1.5
33. Question: When the price of a good is artificially kept below its market equilibrium price, what is the likely outcome in the market?
A) An increase in supply.
B) A decrease in demand.
C) A surplus of the product.
D) A shortage of the product.
Answer: D) A shortage of the product.
34. Question: If the price of a good is artificially kept above its market equilibrium price, what is the likely outcome in the market?
A) An increase in supply.
B) A decrease in demand.
C) A surplus of the product.
D) A shortage of the product.
Answer: C) A surplus of the product.
35. Question: Which of the following statements about the law of demand is true?
A) It states that as the price of a product increases, the quantity demanded also increases.
B) It states that as the price of a product decreases, the quantity demanded also decreases.
C) It states that the demand for a product remains constant regardless of changes in price.
D) It states that the demand for a product is determined solely by consumer income.
Answer: B) It states that as the price of a product decreases, the quantity demanded also decreases.
36. Question: Which of the following goods is most likely to have price elastic demand?
A) Prescription medication.
B) Bottled water.
C) Branded smartphones.
D) Salt.
Answer: C) Branded smartphones.
37. Question: If the price of a product increases, and the total revenue from selling that product increases, what can be said about the price elasticity of demand?
A) The demand is price elastic.
B) The demand is price inelastic.
C) The demand is unitary elastic.
D) The demand is perfectly elastic.
Answer: B) The demand is price inelastic.
38. Question: If the cross-price elasticity of demand between two goods is negative, it indicates that they are:
A) Complementary goods.
B) Substitute goods.
C) Normal goods.
D) Inferior goods.
Answer: A) Complementary goods.
39. Question: A perfectly inelastic demand curve is represented as:
A) A vertical straight line.
B) A horizontal straight line.
C) An upward-sloping curve.
D) A downward-sloping curve.
Answer: A) A vertical straight line.
40. Question: Which of the following goods is likely to have the most price elastic demand?
A) Insulin for diabetic patients.
B) Designer clothing.
C) Toothpaste.
D) Air travel.
Answer: B) Designer clothing.
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