Theory of Demand & Supply – laws, curves, shifts, determinants, exceptions Quiz - ICSE Class 10 Economics

Free practice quiz: Theory of Demand & Supply – laws, curves, shifts, determinants, exceptions (ICSE Class 10 Economics). 52 multiple-choice questions with answers and explanations. Play online, no sign-up needed.

This ICSE Class 10 Economics practice quiz has 52 multiple-choice questions on Theory of Demand & Supply – laws, curves, shifts, determinants, exceptions, and 52 of them come with an explanation. Try the 5 sample questions below (tap an option to check yourself), then play the full quiz online. No sign-up needed.

Sample questions

1. If the demand for a good increases due to a favorable change in consumer tastes, while the supply remains constant, what is the most likely impact on the equilibrium price and quantity?

   1. Equilibrium price increases, equilibrium quantity increases.
   2. Equilibrium price decreases, equilibrium quantity decreases.
   3. Equilibrium price increases, equilibrium quantity decreases.
   4. Equilibrium price decreases, equilibrium quantity increases.
   Show answer

   Answer: A. Equilibrium price increases, equilibrium quantity increases.

   An increase in demand, represented by a rightward shift of the demand curve, leads to a higher equilibrium price and a higher equilibrium quantity, assuming the supply curve remains unchanged (a rightward shift of the supply curve would be needed for quantity to decrease with price increase).

2. Which of the following represents an exception to the law of demand, where an increase in price leads to an increase in quantity demanded?

   1. A good for which consumers have elastic demand.
   2. A Giffen good.
   3. A good that is a close substitute for a more expensive good.
   4. A good whose price is expected to rise further in the future.
   Show answer

   Answer: B. A Giffen good.

   Giffen goods are a rare exception to the law of demand. For these inferior goods, a price increase leads to a decrease in real income, causing consumers to buy more of the Giffen good (as it's a staple) despite the higher price, due to the income effect outweighing the substitution effect.

3. Which of the following statements accurately describes a situation where the demand curve for a normal good shifts to the left?

   1. Consumer income increases.
   2. The price of a substitute good decreases.
   3. The price of the good itself decreases.
   4. Consumer tastes shift towards the good.
   Show answer

   Answer: B. The price of a substitute good decreases.

   If the price of a substitute good falls, consumers will switch from the original good to the cheaper substitute. This leads to a decrease in demand for the original good, causing its demand curve to shift to the left.

4. If the price of a good decreases and the total revenue from selling that good also decreases, then the demand for the good must be:

   1. Elastic
   2. Inelastic
   3. Unit elastic
   4. Perfectly elastic
   Show answer

   Answer: B. Inelastic

   Total Revenue (TR) = Price (P) x Quantity (Q). If price falls and TR also falls, it means the percentage decrease in price is greater than the percentage increase in quantity demanded. This is the definition of inelastic demand.

5. The supply curve for a good will be more elastic if:

   1. Producers have limited access to raw materials.
   2. Production technology is inflexible.
   3. It is easy for firms to enter or exit the industry.
   4. The good is highly perishable.
   Show answer

   Answer: C. It is easy for firms to enter or exit the industry.

   Ease of entry and exit for firms in an industry contributes to a more elastic supply. If prices rise, new firms can more easily enter the market to increase supply. Conversely, if prices fall, firms can exit more easily, reducing supply. Other factors like limited resources, inflexible technology, and perishability tend to make supply less elastic.

More questions in this quiz

Answers and explanations are in the full quiz.

1. Consider a situation where the price of a substitute good for coffee, say tea, increases significantly. How would this likely affect the demand curve for coffee?
2. The law of supply states that, ceteris paribus, as the price of a good increases, the quantity supplied will:
3. A technological advancement in the production of smartphones leads to a decrease in the cost of manufacturing. What is the most probable effect on the supply curve of smartphones?
4. Which of the following scenarios would cause a downward movement along the demand curve for gasoline?
5. Consider the market for apples. If a severe drought reduces the yield of apple orchards, what is the likely impact on the equilibrium price and quantity of apples?
6. Which of the following is NOT a determinant of the demand for a good?
7. If the demand for a luxury good increases as consumer incomes rise, this indicates that the good is:
8. The supply curve for a product will be more elastic if:
9. A rightward shift in the demand curve for a product, coupled with a rightward shift in the supply curve, will definitely lead to:
10. If the government imposes a tax on the production of a good, what is the most likely effect on the supply curve and the equilibrium price and quantity?
11. The demand for a good is said to be inelastic if:
12. When the price of a complement good decreases, what happens to the demand curve of the original good?
13. Consider a market in equilibrium. If there is an increase in the number of sellers in the market, what is the most likely impact on the equilibrium price and quantity?
14. The law of demand is primarily based on the assumption of:
15. A change in consumer expectations about future prices of a good will cause a:
16. If the supply of a product is perfectly inelastic, it means that:
17. Which of the following is an example of a determinant that would cause a downward shift in the supply curve for wheat?
18. If the demand for a good is perfectly elastic, it means that:
19. When a market is in disequilibrium, it means that:
20. Which of the following factors would cause an upward movement along the supply curve for laptops?
21. The concept of 'ceteris paribus' in the law of demand and supply means:
22. If the cross-price elasticity of demand between good A and good B is positive, it implies that A and B are:
23. A decrease in the price of a good that is considered a necessity will most likely lead to:
24. Which of the following would cause a downward shift in the supply curve for gasoline?
25. If the income elasticity of demand for a good is negative, the good is considered:
26. If the price of a good is above its equilibrium price, there will be a:
27. A decrease in consumer income, holding all other factors constant, will cause the demand curve for a normal good to:
28. Which of the following is a determinant of the supply of labor?
29. A decrease in the supply of a good, while demand remains unchanged, will result in:
30. Consider the market for automobiles. If the price of gasoline increases significantly, what is the most likely impact on the demand curve for automobiles?
31. The responsiveness of quantity supplied to a change in price is measured by:
32. If the government places a price ceiling on a good below the equilibrium price, what is the most likely outcome?
33. Which of the following is an example of a good with likely elastic demand?
34. If a producer expects the price of their product to increase in the future, they are likely to:
35. The law of demand applies to all goods except for:
36. If the price of a good increases by 10% and the quantity supplied increases by 5%, the supply is:
37. A shift in the demand curve for a product to the left indicates:
38. If a government imposes a price floor on a good above the equilibrium price, the result will be:
39. Which of the following is a determinant of the demand for a good?
40. When the price of a good decreases, the quantity demanded increases. This is known as the:
41. If the price of a good is below its equilibrium price, there will be a:
42. Which of the following would cause an upward shift in the supply curve for apples?
43. If the income elasticity of demand for a good is 1.5, the good is considered:
44. Consider a market where both the demand and supply curves are downward sloping. If the demand curve shifts to the right and the supply curve shifts to the left, what is the definite impact on the equilibrium?
45. The price elasticity of demand measures:
46. If the cost of production for a good decreases due to efficiency gains, the supply curve will:
47. Which of the following scenarios best describes a situation of a shortage?

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