This quiz works best with JavaScript enabled. Home > Economics > Microeconomics > Demand And Supply Analysis > Demand And Supply Analysis – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Demand And Supply Analysis Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The manager of a small manufacturing firm gathers the following information about the firm's labor utilization and production.Refer to the data in Exhibit 2. The marginal product of labor demonstrates increasing returns for the firm if the number of workers is closest to but not more than: A) 2. B) 3. C) 4. D) None of above. Show Answer Correct Answer: B) 3. 2. In an attempt to make sure that poor Americans can also afford smart phones, the government imposes a price ceiling below the equilibrium price, prohibiting retailers from selling them above that price. How will this policy likely impact the smart phone market? A) It will greatly promote smart phone equity, ensuring that all Americans are now able enjoy this luxury. B) It will greatly increase profits for cell phone manufacturers. C) It will create a surplus of cheap, unsold smart phones. D) It will create a shortage in the smart phone market, leaving many would-be smart phone buyers unable to find one for sale. Show Answer Correct Answer: D) It will create a shortage in the smart phone market, leaving many would-be smart phone buyers unable to find one for sale. 3. The number of consumers for a product increases significantly. How will this affect the market price and quantity for that product? A) Price will decrease, quantity will increase. B) Price and quantity will both increase. C) Price will increase, quantity will decrease. D) Price and quantity will both decrease. Show Answer Correct Answer: B) Price and quantity will both increase. 4. What does the law of Supply state? A) It states that there must be supply in a store. B) There is a straight relationship between price and Supplied quantity. C) They both are correct. D) Both are wrong. Show Answer Correct Answer: B) There is a straight relationship between price and Supplied quantity. 5. ..... refers to actual savings in an economy during a year. A) Ex-ante saving. B) APS. C) MPS. D) Ex-post saving. Show Answer Correct Answer: D) Ex-post saving. 6. What is the result of an increase in demand for a product? A) Rise in price and extension in supply. B) Fall in price and contraction in supply. C) Rise in price and contraction in supply. D) Fall in price and extension in supply. Show Answer Correct Answer: A) Rise in price and extension in supply. 7. The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse, a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is TRUE of the United Kingdom's experience? A) The increase in the price of oil immediately shifted the AS curve to the left. B) The financial crisis did not take hold right away so the AD curve did not immediately shift. C) Eventually, the Lehman Brothers bankruptcy caused a negative demand shock leading to a further fall in output and an increase in the unemployment rate. D) All of the above are true. Show Answer Correct Answer: D) All of the above are true. 8. For a Giffen good, the: A) Demand curve is positively sloped. B) Substitution effect overwhelms the income effect. C) Income and substitution effects are in the same direction. D) None of above. Show Answer Correct Answer: A) Demand curve is positively sloped. 9. Peanut butter and jelly are often purchased together by consumers. Economists would say these two goods are A) Subsidies. B) Substitutes. C) Complements. D) Normal goods. Show Answer Correct Answer: C) Complements. 10. The amount of money spent on making the goods and services is less than the price at which it is sold. A) True. B) False. Show Answer Correct Answer: A) True. 11. A change in the number of consumers. A) Shift in Supply. B) Shift in Demand. Show Answer Correct Answer: B) Shift in Demand. 12. According to aggregate demand and supply analysis, the rising oil prices coupled with the global financial crisis in 2007-2008 caused the unemployment rate to ..... and the level of real aggregate output to ..... A) Increase; decrease. B) Increase; increase. C) Decrease; increase. D) Decrease; decrease. Show Answer Correct Answer: A) Increase; decrease. 13. Downward movement along the same demand curve is known as A) Contraction in Demand. B) Increase in demand. C) Expansion in Demand. D) Decrease in demand. Show Answer Correct Answer: C) Expansion in Demand. 14. What is a Profit? A) When the selling price is less than the cost. B) The actual earning. C) The amount he or she sells the product for. D) The amount a producer spends on producing a good or service. Show Answer Correct Answer: B) The actual earning. 15. Demand means? A) Demand means the products in the store. B) Demand means the people. C) Demand means the materials you see in a store. D) Demand means when you sell a lot of items in a low prize. Show Answer Correct Answer: B) Demand means the people. 16. Parallel shifting of original demand curve is called as A) Increase in supply. B) Shift in demand. C) Movement along the Demand Curve. D) Decrease in supply. Show Answer Correct Answer: B) Shift in demand. 17. The government finally removes a massive excise tax on a popular product, after an election changed the party in power. How will this affect the market price and quantity for that product? A) Price will decrease, quantity will increase. B) Price and quantity will both increase. C) Price will increase, quantity will decrease. D) Price and quantity will both decrease. Show Answer Correct Answer: A) Price will decrease, quantity will increase. 18. Law of demand is ..... A) Inverse relationship between price and quantity. B) Positive relationship between price and quantity. C) Forward relationship between price and quantity. D) Backward relationship between price and quantity. Show Answer Correct Answer: A) Inverse relationship between price and quantity. 19. Consumers will purchase beef if the price of pork increases. Economists would say these two goods are A) Subsidies. B) Substitutes. C) Complements. D) Normal goods. Show Answer Correct Answer: B) Substitutes. 20. Everything else held constant, a balanced budget increase in government spending (that is, an increase in government spending that is matched by an identical increase in net taxes) will A) Not affect aggregate demand. B) Decrease aggregate demand. C) Increase aggregate demand, but not by as much as if just government spending increases. D) Increase aggregate demand by more than if just government spending increases. Show Answer Correct Answer: C) Increase aggregate demand, but not by as much as if just government spending increases. ← PreviousNext →Related QuizzesMicroeconomics QuizzesEconomics QuizzesDemand And Supply Analysis Quiz 1Demand And Supply Analysis Quiz 3Demand And Supply Analysis Quiz 4Demand And Supply Analysis Quiz 5Demand And Supply Analysis Quiz 6Demand And Supply Analysis Quiz 7 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books