Unlock hundreds more features
Save your Quiz to the Dashboard
View and Export Results
Use AI to Create Quizzes and Analyse Results

OR
Sign inSign in with Facebook
Sign inSign in with Google
Quizzes > Quizzes for Business > Business

Take the Microeconomics Knowledge Assessment

Assess Fundamental Principles of Supply and Demand

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting elements related to a Microeconomics Knowledge Assessment quiz.

Ready to explore your understanding of market fundamentals? This microeconomics quiz challenges students with realistic scenarios that cover supply, demand, and market structures. Ideal for learners and educators seeking a comprehensive Microeconomics Knowledge Quiz or general Knowledge Assessment Quiz. Each question can be freely adjusted in our editor to suit your needs. Discover more quizzes and elevate your economic insights today.

According to the law of demand, if the price of a good increases while other factors remain constant, the quantity demanded will:
Become unpredictable
Increase
Remain constant
Decrease
The law of demand states that, ceteris paribus, price and quantity demanded move in opposite directions. Thus, a price increase leads to a decrease in quantity demanded.
Which of the following is a key determinant of demand rather than supply?
Input costs
Technology
Consumers' income
Number of sellers
Consumers' income affects their purchasing power and shifts demand. Changes in input costs or technology shift supply, and number of sellers is also a supply determinant.
A rightward shift of the supply curve can be caused by:
An increase in taxes
Stricter regulations
An increase in input prices
A subsidy to producers
A subsidy reduces producers' costs, encouraging more supply at each price and shifting the supply curve rightward. Higher input prices, taxes, or regulations shift supply leftward.
If the price elasticity of demand for a product is greater than one in absolute value, the demand is considered:
Elastic
Inelastic
Unit elastic
Perfectly inelastic
Elastic demand implies that the percentage change in quantity demanded exceeds the percentage change in price, so elasticity in absolute value is greater than one.
In the short run, which of the following costs is fixed?
Wages for hourly labor
Utility bills for production
Rent on factory premises
Cost of raw materials
Rent remains constant regardless of output in the short run, making it a fixed cost. Wages, materials, and utilities vary with production levels.
If price rises from $10 to $12 and quantity demanded falls from 100 to 80, what is the price elasticity of demand (percentage change divided)?
1.2
0.8
2.0
1.0
Percentage change in quantity is -20%, in price is +20%, so elasticity = |-20%/20%| = 1. This indicates unit elastic demand over that range.
If consumers expect prices to rise in the future, current demand will:
Shift rightward
Shift leftward
Remain unchanged
Become perfectly elastic
Expectations of higher future prices increase current willingness to buy, shifting the demand curve to the right as consumers purchase sooner.
In perfect competition, firms are price takers because:
There are barriers to entry
Each firm is too small to influence market price
Each firm produces a unique product
Firms coordinate prices together
Firms in perfect competition sell identical products and face many competitors. No single firm's output decision affects the market price, making them price takers.
In a monopoly, marginal revenue is typically:
Zero
Less than price
Greater than price
Equal to price
A monopolist's marginal revenue lies below the demand curve because lowering price to sell additional units applies to all units, reducing incremental revenue.
A per-unit subsidy to producers will cause the supply curve to:
Shift leftward by the subsidy amount
Rotate upward around the origin
Remain unchanged
Shift rightward by the subsidy amount
A subsidy lowers producers' costs for each unit, encouraging greater supply at each price. Graphically, the supply curve shifts right by the subsidy amount.
Given demand Qd = 20 - P and supply Qs = P - 4, the equilibrium price and quantity are:
P = 10, Q = 10
P = 8, Q = 12
P = 14, Q = 6
P = 12, Q = 8
Setting 20 - P = P - 4 gives 2P = 24, so P = 12 and Q = 20 - 12 = 8. This is the market equilibrium where quantity demanded equals quantity supplied.
If the cross-price elasticity of two goods is positive, the goods are:
Substitutes
Inferior goods
Independent
Complements
A positive cross-price elasticity means that an increase in the price of one good raises the demand for the other, indicating they are substitutes.
Marginal cost is defined as the change in total cost when output changes by:
Ten units
One unit
Any arbitrary amount
Zero units
Marginal cost measures the additional cost of producing one more unit of output and is calculated as the change in total cost divided by the change in quantity.
A specific tax on a good will typically lead to:
Supply shifting left and higher price
Demand shifting right and higher quantity
Demand shifting left and lower quantity
Supply shifting right and a lower price
A specific tax increases producers' costs, shifting the supply curve leftward. This raises equilibrium price for consumers and lowers equilibrium quantity.
A firm with cost function C(Q) = 100 + 2Q + Q² and price P = 10 under perfect competition maximizes profit by producing:
Q = 2
Q = 8
Q = 4
Q = 6
Under perfect competition, profit is maximized where price equals marginal cost. MC = 2 + 2Q, so set 10 = 2 + 2Q, yielding Q = 4 units.
Using the midpoint formula, what is the price elasticity of demand between (P₀=20, Q₀=80) and (P₝=25, Q₝=60)?
-0.75
-1.29
0.65
-0.45
Midpoint elasticity = [(60-80)/((60+80)/2)] / [(25-20)/((25+20)/2)] = (-20/70)/(5/22.5) ≈ -0.2857/0.2222 ≈ -1.29. The negative sign shows the inverse price-quantity relationship.
A monopolist faces demand P = 50 - 2Q and has total cost TC = 10Q. Profit-maximizing output, price, and profit are:
Q = 12, P = 26, Profit = 192
Q = 8, P = 34, Profit = 192
Q = 10, P = 30, Profit = 200
Q = 15, P = 20, Profit = 150
MR = 50 - 4Q and MC = 10. Setting MR = MC yields Q = 10, then P = 50 - 2(10) = 30. Profit = (30 - 10)×10 = 200.
For a cost function C(Q) = 50 + 5Q + Q², at what output level does average cost equal marginal cost?
Q = 10
Q ≈ 7.07
Q = 5
Q = 25
AC = 50/Q + 5 + Q, MC = 5 + 2Q. Setting AC = MC gives 50/Q + 5 + Q = 5 + 2Q, which simplifies to Q² = 50, so Q ≈ √50 ≈ 7.07.
In monopolistic competition, long-run equilibrium is characterized by:
MC = MR and persistent entry barriers
P = ATC and zero economic profit
P < ATC and losses
P > ATC and positive economic profit
Free entry and exit drive economic profit to zero in the long run, so price equals average total cost. Firms still differentiate products, but profits vanish.
Which of the following best explains why a per-unit tax creates a deadweight loss in a market?
The supply curve rotates upward
Trade volume decreases, causing lost welfare
Government revenue exceeds total tax collected
Consumers pay the entire tax burden
A per-unit tax raises the price buyers pay and lowers the price sellers receive, reducing the quantity traded. The lost trades represent deadweight loss as both consumer and producer surplus shrink.
0
{"name":"According to the law of demand, if the price of a good increases while other factors remain constant, the quantity demanded will:", "url":"https://www.quiz-maker.com/QPREVIEW","txt":"According to the law of demand, if the price of a good increases while other factors remain constant, the quantity demanded will:, Which of the following is a key determinant of demand rather than supply?, A rightward shift of the supply curve can be caused by:","img":"https://www.quiz-maker.com/3012/images/ogquiz.png"}

Learning Outcomes

  1. Identify key determinants of supply and demand shifts
  2. Analyze consumer and producer behavior under market equilibrium
  3. Calculate price elasticity and interpret its economic implications
  4. Evaluate different market structures including competition and monopoly
  5. Apply marginal analysis to optimize production decisions
  6. Distinguish between fixed and variable costs in cost functions

Cheat Sheet

  1. Understand the Law of Demand - This nifty rule tells you that when prices climb, buyers step back, and when prices drop, everyone's lining up to snatch a deal. It's the heartbeat of consumer behavior, showing how price tags influence our shopping sprees. Learn more
  2. Identify Demand Shifters - Demand isn't stuck in one spot; it dances around based on income changes, fads, related goods, buyer numbers, and even future expectations. Think of it as a popularity contest where tastes, wallets, and whispers about tomorrow all compete for center stage. Learn more
  3. Grasp the Law of Supply - Producers love higher prices because it motivates them to make (and sell) more; when prices dip, they hit the brakes and supply slows down. It's the flip side of the demand coin, revealing how sellers respond to market signals. Learn more
  4. Recognize Supply Shifters - Just like demand, supply curves can shift thanks to factors like production costs, tech breakthroughs, the number of suppliers, and government rules. Picture a factory upgrade that sends supply soaring, or a tax hike that drags it down. Learn more
  5. Analyze Market Equilibrium - This golden point appears where supply meets demand, pinning down the magic price and quantity for a balanced market. It's like finding the perfect seesaw position where neither side tips over. Learn more
  6. Calculate Price Elasticity of Demand - Use the formula: (% Change in Quantity Demanded) ÷ (% Change in Price) to gauge how drastic buyers react to price swings. It's your toolkit for predicting whether a price tweak sparks a frenzy or barely a ripple. Learn more
  7. Interpret Elasticity Values - If elasticity > 1 demand is elastic (very price-sensitive), < 1 means inelastic (price changes barely matter), and = 1 is unitary elastic (proportional changes). This insight helps set prices like a pro - maximizing revenue without scaring off buyers. Learn more
  8. Evaluate Different Market Structures - From perfect competition's endless sellers to monopolies' single rulers, and oligopolies' few powerhouses to monopolistic competition's brand battles, each structure shapes pricing and output in unique ways. Think of it as economic ecosystems with their own rules of survival. Learn more
  9. Apply Marginal Analysis - Weigh marginal cost against marginal revenue to find the sweet production spot where profit peaks. It's like balancing extra effort and reward - stop when the extra gain equals the extra expense. Learn more
  10. Distinguish Between Fixed and Variable Costs - Fixed costs (rent, salaries) stay put no matter how much you produce, while variable costs (materials, utilities) flex with output levels. Mastering this difference is key to smart budgeting and profit planning. Learn more
Make a Quiz (FREE) Copy & Edit This Quiz Create a Quiz with AI

Business Quizzes

Powered by: Quiz Maker