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Essential Short-Answer Quiz on Supply and Demand
University of Bristol
Essential short-answer quiz on supply and demand! Whether you're a student, educator, or just
curious about economics, this 30-question quiz will help you grasp the fundamental concepts
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Explain what a substitute good is
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It's where the amount of
goods people want to buy matches exactly what producers are willing to supply,
leading to a stable price
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If prices fall, they usually produce
less
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The law of demand simply says that when the price of something goes up,
people tend to buy less of it
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Think of substitute goods like alternatives
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Explain what a complementary good is
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This can drive prices up as
demand outpaces supply
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This usually leads to lower prices to sell off the excess
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Inelastic demand means people still buy a product even if its price rises
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Define a surplus in supply and demand terms
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How does total revenue change if demand is inelastic and prices rise?
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Price elasticity of demand shows how sensitive people are to price changes
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How does total revenue change if demand is elastic and prices rise?
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Complementary goods are those that go hand in hand
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Changes in how much people earn, their tastes, the prices of related goods, what
they expect to pay, or how many buyers there are—all these can shift the
demand curve
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What is a price ceiling?
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What is a price floor?
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When both demand and supply increase at the same time, the amount of goods
available at equilibrium rises too
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Explain the impact on equilibrium price and quantity with decreased supply and
increased demand simultaneously
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They set the lowest
hourly rate workers can be paid to ensure they earn a fair wage
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Give an example of a price floor
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For example, minimum wage laws set a price floor for workers' pay
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A price ceiling is like a cap set by the government on how much people can
charge for certain things, like rent in cities, to keep prices affordable
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How much prices rise and how many goods are sold
depends on which change is larger
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It's used by economists to focus on how two things affect each other without
outside factors getting in the way
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Like how the first slice of pizza is great, but
the tenth might not be as exciting
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This lets producers
make more of something for less money, shifting the supply curve to the right
and giving consumers more choices
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Producer surplus is what producers earn when they sell things for more than it
costs to make them
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How does technology increase supply?
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Consumer surplus is how much people save when they buy things for less than
they're willing to pay
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What is producer surplus?
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Taxes on goods raise producers' costs, which makes them supply less
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What is consumer surplus?
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Government subsidies encourage producers by lowering their costs to make
more goods
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The income effect is how people change what they buy when their paychecks
change
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If you
make less, you might buy cheaper things
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Like buying store-brand soda when the fancy kind gets too
pricey
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An inferior good is something you buy less of when you're doing better
financially
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Define 'normal good' in economics
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It's like upgrading from a budget vacation to a fancier one when you have the
cash

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