Demand And Supply test This test consists of 10 questions designed to test your understanding of demand and supply theory The links provide you with a choice of answer, along with explanations and solutions. You will need a calculator to complete this test. Question 1. The basic law of demand states? a. The lower the price the higher the quantity supplied b. The lower the price the lower the quantity demanded c. The lower the price the higher the quantity demanded Correct. Wrong Try again. Wrong. Try again. Question 2. A successful promotion campaign designed to increase brand loyalty is likely to : A. Make price elasticity of supply more elastic B. Make price elasticity of demand more inelastic C. Make price elasticity of demand more elastic Wrong. Try Again Wrong. Try again Correct. Question 3. Which of the following is likely to increase supply without an increase in price? A. Mass marketing campaign B. Technological advances C. Higher real incomes of consumers Wrong. Correct. Wrong Try Again. Question 4. Which of the following is an elastic level of price elasticity of demand? A. 0.56 B. 1.0 C. 2.4 Inelastic – try again. Try again Correct Above 1 elastic Question 5. Which of the following is likely to increase demand levels? A. A fall in the price of a substitute B. A fall in the price of a compliment Wrong. Correct Question 6. A fall in price of a good with price elasticity of demand of 2.2 will A. Increase revenues B. Leave revenues unchanged C. Decrease revenues Correct. No, try again No, Try again Question 7. An increase in real incomes will A. Lead to a less than proportional increase in demand for basic goods. B. Lead to a more than proportional increase in demand for luxury goods 1. Both 2. A only Wrong. Correct. Question 8. Which of the following are types of product are likely to have an inelastic Ped? A. Petrol B. Toilet Roll C. Water 1. A and B 2. B and C 3. All of the above. Sorry, try again Correct. Try again Question 9. A firm with products priced at 10p increases price to 12p, Ped is 0.5. Quantity demanded will change by? A. An increase of 20% B. A fall of 20% C. A fall of 10% Wrong, try again. Sorry Try again Correct Question 10. A firm increases price from 20p to 22p, revenue falls from £40,000 to £32,000. Ped is? A. 0.1 B. 4 C. 2 Sorry wrong No, try again Correct. Well done. You have now completed the test.