Demand And Supply testDemand And Supply test

This test consists of 10 questions designed This test consists of 10 questions designed to test your understanding of demand and to test your understanding of demand and supply theorysupply theory

The links provide you with a choice of The links provide you with a choice of answer, along with explanations and answer, along with explanations and solutions.solutions.

You will need a calculator to complete this You will need a calculator to complete this test.test.

Question 1.Question 1.

The basic law of demand states?The basic law of demand states?a. The lower the price the higher the quantity a. The lower the price the higher the quantity

suppliedsuppliedb. The lower the price the lower the quantity b. The lower the price the lower the quantity

demandeddemandedc. The lower the price the higher the quantity c. The lower the price the higher the quantity

demandeddemanded

Correct.

Wrong Try again.

Wrong. Try again.

Question 2.Question 2.

A successful promotion campaign designed to A successful promotion campaign designed to increase brand loyalty is likely to :increase brand loyalty is likely to :

A. Make price elasticity of supply more elasticA. Make price elasticity of supply more elastic

B. Make price elasticity of demand more B. Make price elasticity of demand more inelasticinelastic

C. Make price elasticity of demand more elasticC. Make price elasticity of demand more elastic

Wrong. Try Again

Wrong. Try again

Correct.

Question 3.Question 3.

Which of the following is likely to increase Which of the following is likely to increase supply without an increase in price?supply without an increase in price?

A. Mass marketing campaignA. Mass marketing campaignB. Technological advancesB. Technological advancesC. Higher real incomes of consumersC. Higher real incomes of consumers

Wrong.

Correct.

Wrong Try Again.

Question 4.Question 4.

Which of the following is an elastic level of Which of the following is an elastic level of price elasticity of demand?price elasticity of demand?

A. 0.56A. 0.56B. 1.0B. 1.0C. 2.4C. 2.4

Inelastic – try again.

Try again

Correct Above 1 elastic

Question 5.Question 5.

Which of the following is likely to increase Which of the following is likely to increase demand levels?demand levels?

A.A. A fall in the price of a substituteA fall in the price of a substitute

B. A fall in the price of a complimentB. A fall in the price of a compliment

Wrong.

Correct

Question 6.Question 6.

A fall in price of a good with price elasticity of A fall in price of a good with price elasticity of demand of 2.2 will demand of 2.2 will

A. Increase revenuesA. Increase revenuesB. Leave revenues unchangedB. Leave revenues unchangedC. Decrease revenuesC. Decrease revenues

Correct.

No, try again

No, Try again

Question 7.Question 7.

An increase in real incomes willAn increase in real incomes willA. Lead to a less than proportional increase in A. Lead to a less than proportional increase in

demand for basic goods.demand for basic goods.B. Lead to a more than proportional increase in B. Lead to a more than proportional increase in

demand for luxury goodsdemand for luxury goods

1. Both1. Both2. A only2. A only

Wrong.

Correct.

Question 8.Question 8.

Which of the following are types of product are Which of the following are types of product are likely to have an inelastic Ped?likely to have an inelastic Ped?

A. PetrolA. PetrolB. Toilet RollB. Toilet RollC. WaterC. Water1. A and B1. A and B2. B and C2. B and C3. All of the above.3. All of the above.

Sorry, try again

Correct.

Try again

Question 9.Question 9.

A firm with products priced at 10p increases A firm with products priced at 10p increases price to 12p, Ped is 0.5. Quantity price to 12p, Ped is 0.5. Quantity demanded will change by?demanded will change by?

A.A. An increase of 20%An increase of 20%B.B. A fall of 20%A fall of 20%C. A fall of 10%C. A fall of 10%

Wrong, try again.

Sorry Try again

Correct

Question 10.Question 10.

A firm increases price from 20p to 22p, A firm increases price from 20p to 22p, revenue falls from £40,000 to £32,000. Ped revenue falls from £40,000 to £32,000. Ped is?is?

A. 0.1A. 0.1B. 4B. 4C. 2C. 2

Sorry wrong

No, try again

Correct. Well done.

You have now completed the test.