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Quizzes > Business & Finance > Finance & Economics

Ready for the Supply and Demand Quiz? Prove Your Market Know-How

Think you know price mechanisms? Dive into the Market Equilibrium Quiz!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art supply and demand graph with arrows coins and boxes on sky blue background quiz banner

Curious about how prices dip and soar? Dive into our free supply and demand quiz to challenge your grasp of market forces! Whether you're brushing up on core supply basics or exploring deeper dynamics with our market equilibrium quiz, you'll test your knowledge of supply curves, demand shifts, and the price mechanism. Designed for students, professionals, and anyone intrigued by economic principles, this quick assessment reveals where you shine and what to review. Ready to level up your understanding? Click through our demand and supply quiz and start acing those supply and demand questions now!

What does the law of demand state?
As price increases, quantity demanded increases
Demand curve slopes upward
Quantity demanded remains constant regardless of price
As price increases, quantity demanded decreases
The law of demand indicates that consumers purchase less of a good when its price rises, holding other factors constant. This negative relationship is due to the substitution and income effects. It is reflected by a downward-sloping demand curve on price-quantity graphs. Details at Investopedia.
According to the law of supply, how does quantity supplied respond to price changes?
Quantity supplied decreases as price increases
Supply curve slopes downward
Quantity supplied increases as price increases
Quantity supplied remains constant regardless of price
The law of supply states that producers are willing to offer more of a good at higher prices. This positive relationship arises because higher prices cover higher production costs and increase profitability. It is shown as an upward-sloping supply curve on price-quantity diagrams. More information at Investopedia.
What is market equilibrium?
The maximum price consumers are willing to pay
The minimum price producers accept
The price and quantity at which supply equals demand
Any point where the supply curve crosses the price axis
Market equilibrium occurs where the quantity demanded by consumers equals the quantity supplied by producers, resulting in no incentive for price to change. At this intersection, the market clears with neither surplus nor shortage. The equilibrium price and quantity are fundamental in price theory. See Investopedia.
Which factor causes a movement along the demand curve rather than a shift of the curve?
A change in consumer income
A change in the price of related goods
A change in the good's own price
A change in consumer tastes
Movements along the demand curve are exclusively caused by changes in the good's own price, reflecting the inverse price-quantity relationship described by the law of demand. Other factors like income, tastes, and prices of related goods shift the entire curve. Recognizing these distinctions is vital in supply and demand analysis. More at Investopedia.
What is a shortage in a market?
Quantity demanded exceeds quantity supplied at a given price
Price is above equilibrium
Supply and demand are equal
Quantity supplied exceeds quantity demanded at a given price
A shortage occurs when the price is set below the equilibrium, causing quantity demanded to exceed quantity supplied. This leads to unmet consumer demand and upward pressure on price. Shortages indicate that the market price does not clear the market. See Investopedia.
What defines a surplus in a market?
Quantity supplied exceeds quantity demanded at a given price
Price is below equilibrium
Supply equals demand
Quantity demanded exceeds quantity supplied at a given price
A surplus arises when price is above the market equilibrium, causing suppliers to offer more than consumers demand. This leads to unsold inventory and downward pressure on price. Understanding surpluses helps explain price adjustments in free markets. More details at Investopedia.
Which of the following pairs are complementary goods?
Butter and margarine
Printers and ink cartridges
Bread and butter
Coffee and tea
Complementary goods are consumed together, so a price change in one affects demand for the other. Printers and ink cartridges are classic examples: using a printer requires ink cartridges. Bread and butter or coffee and tea are consumed together by some but are not strict complements in economic theory. Read more at Investopedia.
What is the likely effect of imposing a binding price ceiling below the equilibrium price?
A persistent shortage of the good
Producers increase supply beyond demand
A persistent surplus of the good
The market remains at equilibrium
A binding price ceiling below equilibrium prevents the price from rising to the market-clearing level, leading to excess demand or a shortage. Consumers demand more at the lower price while suppliers produce less, creating imbalances. Examples include rent control in cities. More at Investopedia.
What happens when a binding price floor is set above the equilibrium price?
Demand increases to clear the market
A persistent surplus of the good
The market remains at equilibrium
A persistent shortage of the good
A binding price floor above equilibrium enforces a minimum price that buyers are unwilling to pay, causing quantity supplied to exceed quantity demanded, resulting in a surplus. A common example is minimum wage laws leading to labor surpluses. Details at Investopedia.
If consumer incomes rise and the good is normal, what happens to the demand curve?
It shifts to the right
It shifts to the left
There is movement along the curve
It remains unchanged
For normal goods, an increase in consumer income raises demand at every price, shifting the demand curve to the right. This represents higher willingness to purchase more at each price point. Inferior goods exhibit the opposite effect when income increases. See Investopedia.
Which of the following pairs are substitute goods?
Tea and sugar
Phones and phone cases
Printers and ink cartridges
Butter and margarine
Substitute goods can replace each other in consumption; a price increase in one leads to higher demand for the other. Butter and margarine are classic substitutes because consumers switch if one becomes more expensive. Printers and ink cartridges are complements. More at Investopedia.
A product is said to be price elastic if its price elasticity of demand is:
Greater than 1
Equal to 1
Less than 1
Zero
Price elasticity of demand measures sensitivity of quantity demanded to price changes. If the percentage change in quantity exceeds the percentage change in price, elasticity is greater than one, indicating elastic demand. This implies consumers are responsive to price changes. More information at Investopedia.
How does an excise tax on a good typically affect the supply curve?
It has no impact on supply
It shifts the supply curve upward or to the left
It shifts the supply curve downward or to the right
It causes movement along the supply curve
An excise tax raises production costs per unit, causing suppliers to supply less at each price. This is represented by an upward (or leftward) shift of the supply curve. The tax burden is shared between consumers and producers. See Investopedia.
What is consumer surplus?
The total revenue received by producers
The difference between what consumers are willing to pay and what they actually pay
The extra output generated by consumers
The area under the supply curve
Consumer surplus is the benefit consumers receive when they pay less for a good than the maximum they are willing to pay. Graphically, it is the area between the demand curve and the market price, up to the quantity purchased. It measures consumer welfare in market transactions. More at Investopedia.
What is producer surplus?
The difference between revenue and taxes paid
The difference between the market price and the lowest price producers would accept
The total cost of production
The area above the demand curve
Producer surplus is the benefit sellers receive when they sell at a market price higher than their minimum acceptable price. Graphically, it is the area between the market price and the supply curve, up to the quantity sold. It represents producer welfare in market exchanges. Details at Investopedia.
Given the demand curve P = 100 - 2Q and the supply curve P = 20 + 3Q, what are the market equilibrium price and quantity?
Price = 80, Quantity = 10
Price = 60, Quantity = 20
Price = 75, Quantity = 12
Price = 68, Quantity = 16
Set demand equal to supply: 100 - 2Q = 20 + 3Q, solving gives 5Q=80 and Q=16. Plugging back yields P=100-2×16=68. These values clear the market where quantity supplied equals quantity demanded. See Investopedia.
If the price of a good increases by 10% and the quantity demanded decreases by 20%, how would you classify the price elasticity of demand?
Unitary elastic
Elastic
Perfectly inelastic
Inelastic
Price elasticity is calculated as the percentage change in quantity demanded divided by the percentage change in price. Here, elasticity = (-20%)/(10%) = -2, which has an absolute value greater than 1, indicating elastic demand. Consumers are highly responsive to the price change. More at Investopedia.
When both supply and demand curves shift to the right, what is the effect on equilibrium price and quantity?
Quantity increases; price is ambiguous
Quantity increases; price decreases
Quantity is ambiguous; price decreases
Quantity decreases; price increases
If demand and supply both increase (shift right), equilibrium quantity unambiguously rises because both shifts add to quantity. Equilibrium price, however, depends on the relative magnitudes of the shifts and is therefore ambiguous. If demand shifts more, price rises; if supply shifts more, price falls. For more, see Investopedia.
Who bears a larger share of a tax burden if supply is more elastic than demand?
Burden is shared equally
The government bears the entire burden
Consumers bear a larger share
Producers bear a larger share
The side of the market that is less elastic (more inelastic) cannot adjust quantity as easily and thus bears a larger share of the tax burden. If supply is more elastic than demand, consumers (demand side) will bear more of the tax incidence. Elasticity determines tax incidence, not statutory incidence. See Investopedia.
How does higher elasticity of supply and demand affect deadweight loss from a tax?
Deadweight loss increases
Deadweight loss decreases
Deadweight loss is eliminated
Deadweight loss remains unchanged
Deadweight loss from a tax measures the lost economic efficiency due to lower traded quantity. The more elastic supply or demand is, the larger the reduction in quantity for a given tax, leading to a greater deadweight loss. Conversely, inelastic curves yield smaller losses. More at Investopedia.
For the demand curve P = 50 - Q and supply curve P = Q, what is the consumer surplus at equilibrium?
312.5
250.0
500.0
625.0
At equilibrium, 50 - Q = Q gives Q=25 and P=25. Consumer surplus is the area of the triangle between the demand curve intercept (P=50) and equilibrium price: 0.5×(base Q=25)×(height 50-25=25)=312.5. This measures the extra benefit consumers receive. Details at Investopedia.
What is the effect of a price ceiling set above the equilibrium price?
Creates a shortage
Creates a surplus
No effect on the market
Leads to black markets immediately
A price ceiling above equilibrium is non-binding because the market price is lower than the ceiling. It does not constrain the market or alter supply and demand, so there is no shortage or surplus. Only binding ceilings (below equilibrium) affect markets. See Investopedia.
With Qd = 100 - P and Qs = P - 20, a $10 per unit tax is imposed on sellers. What are the new consumer price, producer price, total tax revenue, and deadweight loss?
Consumer price 60, producer price 50, tax revenue 400, deadweight loss 25
Consumer price 70, producer price 60, tax revenue 300, deadweight loss 15
Consumer price 65, producer price 55, tax revenue 350, deadweight loss 12.5
Consumer price 66, producer price 56, tax revenue 350, deadweight loss 10
Original equilibrium: 100-P = P-20 ? P=60, Q=40. With a $10 tax on sellers, supply becomes P? = P_c - 10, solving 100-P_c = P_c -30 gives P_c=65, Q=35, so producers receive 55. Tax revenue is $10×35=350. Deadweight loss is 0.5×5×5=12.5. For more, see Investopedia.
Which of the following best describes a Giffen good?
A substitute good with positive cross-price elasticity
A necessity with perfectly inelastic demand
An inferior good for which a price increase leads to higher quantity demanded
A luxury good with high positive income elasticity
A Giffen good is an inferior good where the income effect of a price rise outweighs the substitution effect, leading consumers to buy more as price increases. This phenomenon violates the typical law of demand and is very rare. Historical examples include staple foods in impoverished regions. Read more at Investopedia.
If the cross-price elasticity of demand between two goods is 1.5 and the price of Good B increases by 8%, how will the quantity demanded of Good A change?
It will increase by 1.5%
It will increase by 8%
It will increase by 12%
It will decrease by 12%
Cross-price elasticity of 1.5 means a 1% change in the price of Good B leads to a 1.5% change in quantity demanded of Good A. Since Good B's price increases by 8% and the elasticity is positive (substitutes), quantity demanded of Good A increases by 1.5×8%=12%. More at Investopedia.
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Study Outcomes

  1. Understand Supply and Demand Fundamentals -

    After completing the quiz, you can define supply and demand, distinguish their key determinants, and explain how they interact in markets.

  2. Analyze Demand Curve Shifts -

    Identify and assess factors such as consumer preferences, income changes, and expectations that cause the demand curve to shift.

  3. Analyze Supply Curve Shifts -

    Evaluate how production costs, technology, and supplier expectations influence shifts in the supply curve.

  4. Interpret Market Equilibrium -

    Determine equilibrium price and quantity, and explain how market forces restore equilibrium after disturbances.

  5. Apply Price Mechanisms -

    Use real-world scenarios to illustrate how price adjustments balance supply and demand and allocate resources efficiently.

  6. Identify Surpluses and Shortages -

    Recognize conditions leading to excess supply or demand and predict how markets adjust to resolve these imbalances.

Cheat Sheet

  1. Law of Demand -

    The law of demand describes the inverse relationship between price and quantity demanded: as P↑, Q↓. A handy mnemonic is "Price Up, Quantity Down" or PUPQDOWN (Mankiw, 2018). Remembering this improves accuracy on your next supply and demand quiz.

  2. Law of Supply -

    The law of supply states that price and quantity supplied move in the same direction: as P↑, firms produce more. Refer to the linear supply function Qs = a + bP to see how sensitivity to price (b) affects output (Khan Academy). This concept is crucial for acing any economic principles quiz on supply basics.

  3. Market Equilibrium -

    Market equilibrium is where supply equals demand (Qs(P*) = Qd(P*)), yielding equilibrium price (P*) and quantity (Q*). For example, solving 100 − 2P = −20 + 3P gives P* = 24 and Q* = 52 (University of Chicago ed.). Understanding this solves typical problems in a market equilibrium quiz.

  4. Curve Shifts vs. Movements -

    A shift of a demand or supply curve means a change in non-price determinants like income or technology, whereas a movement along the curve is due solely to price changes. Recall: "Shifts Start with External" to differentiate from price-induced movements (University of Oxford notes). Mastering this distinction is essential for tackling price mechanism quiz questions.

  5. Price Mechanism & Surpluses/Shortages -

    The price mechanism automatically adjusts prices to clear surpluses (excess supply) and shortages (excess demand): a surplus pushes P↓, while a shortage pushes P↑ (International Monetary Fund). Visualizing surplus as a "high tide" receding with price cuts can help cement this for your supply and demand quiz. This dynamic underscores how markets self-correct.

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