TUTORIAL/ECO162/TOPIC 2/ODL

TOPIC 2: DEMAND AND SUPPLY

PART A

1. The demand curve for good H is downward sloping, so an increase in its price will
cause

A. an upward movement along the demand curve.

B. a downward movement along the demand curve.
C. a rightward shift of the demand curve.
D. the demand curve to remain unchanged.

2. The larger the proportion of income spent on a good

A. the less elastic is the good’s demand curve.

B. the more elastic is the good’s demand curve.
C. the more inelastic is the good’s demand curve.
D. no effect on the good’s demand curve

3. A lower price increases the quantity demanded because

A. the purchasing power of individuals decrease.

B. the financial assets of individuals decrease.
C. individuals buy more of the product and less of the substitute.
D. individual buy less of the product and more of the substitute.

4. A point on the demand curve indicates

A. the ratio of the selling price to the buying price.

B. a particular price and the corresponding quantity demanded by consumers.
C. a combination of two commodities which buyers will choose at given prices.
D. a situation where the buying and selling decisions of consumers and producers
are consistent.

5. If service stations raise the price of petrol and experience a decrease in demand for
automobile tyres, then petrol and tyres are

A. substitutes
B. unrelated goods.
C. inferior goods.
D. complements.

6. If the price of a good decreases, we would expect

A. quantity demanded to increase.

B. quantity supplied to increase.
C. supply to increase.
D. demand to increase.

7. If the price of good A decreases, the demand curve for its close substitutes will

A. shift to the left.

B. shift to the right.

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C. remain unchanged.
D. cannot be determined.

8. If the demand for cheesecake decreases when income increases, this means that
cheesecake is ______________.

A. a complementary good.
B. a normal good.
C. a luxury good.
D. an inferior good.

9. The demand curve for a product will shift to the right if:

A. the price of the product fall

B. the price of substitute product increase
C. there is a successful advertising campaign for a substitute product
D. there is an increase in subsidy paid to producers of the product

10. Which of the following statements is correct?

A. Hajiyat goods are the necessities

B. Kamaliat goods improves one’s quality of life
C. Tarafiat are the extravagant and wasteful goods.
D. Dharuriyat are the goods for perfection of human life

11. If the price of a product increase, most likely:

A. the quantity demanded will decrease

B. the quantity supplied will decrease
C. demand will increase
D. supply will decrease

12. Which of the followings does not belong to the classification of consumer goods in
Islam?

A. Hajiyat
B. Tarafiat
C. Khalifah
D. Dharuriyat

13. A rightward shift of the supply curve could be caused by

A. a fall in the price of the good.

B. an increase in the number of suppliers of the good.
C. an increase in the cost of production of the good.
D. an increase in the price of the good.

14. The following factors can decrease the supply of palm oil except

A. government reduces tax on inputs in palm oil industry.

B. government decides to send back foreign workers in the agriculture sector.
C. more oil palm estates have been converted to other estates.
D. harvesting of oil palm during monsoon season.
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15. Which of the followings is NOT a general determinant of supply for most products?
A. Income
B. Taxes
C. Technology
D. Level of input prices

16. Which of the following would not cause an increase in the supply of corn?
A. A decrease in the price of wheat
B. decrease in the price of machinery and equipment used in corn farming
C. A decrease in the price of corn
D. Improvement in the technique of growing corn

17. Which of the following factors is not a determinant of supply?

A. Number of sellers
B. Cost of production
C. Number of consumers
D. Technological advancement

18. As price decreases, the quantity supplied will _______

A. decrease
B. be uncertain
C. increase
D. be unchanged

19. Which of the following pairs are complements?

A. Milo and Tea
B. Butter and margarine
C. Pen and ink
D. Rambutan and durian.

20. The upward movement along the supply curve is caused by an increase in
__________.
A. the number of population.
B. the number of suppliers.
C. the number of substitute goods
D. the price of good.

21. If the increase in the price of Good W leads to an increase in the supply of Good Y,
this means that Goods W and Y are _________.
A. complementary goods.
B. substitute goods.
C. luxury goods.
D. inferior goods.

22. The law of supply states that

A. a decrease in the price of a good will cause the supply curve shift to the right.
B. an increase in the price of good will cause the supply curve to shift to the right
C. the price of a good is not a related to the quantity supplied of the good.
D. the price of a good is positively related to the quantity supplied of the good.

23. The law of demand states that, other things remaining the same, the higher the price
of a good, the
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A. smaller is the demand for the good.

B. smaller is the quantity of the good demanded
C. larger is the quantity of the good demanded.
D. larger is the demand for the good.
24. The law of demand implies that, other things remaining the same,
A. as the demand for cheeseburgers increases, the price of a cheeseburger will
fall.
B. as the price of a cheeseburger rises, the quantity of cheeseburgers
demanded will decrease.
C. as income increases, the quantity of cheeseburgers demanded will increase.
D. as the price of a cheeseburger rises, the quantity of cheeseburgers
demanded will increase.

25. The law of demand states that the quantity of a good demanded varies
A. inversely with its price.
B. directly with population.
C. directly with income.
D. inversely with the price of substitute goods

26. Which of the following influences people's buying plans and varies moving along a
demand curve?
A. preferences
B. the price of the good
C. income
D. the prices of related goods

27. A drop in the price of a compact disc shifts the demand curve for prerecorded tapes
leftward. From that you know compact discs and prerecorded tapes are
A. normal goods.
B. substitutes.
C. inferior goods.
D. complements.