This set of Production Planning and Control Multiple Choice Questions & Answers (MCQs) focuses on “Master Schedule – Sources of Demand”.
1. Which of the following definitely causes a fall in the equilibrium price?
a) A decrease in both demand and supply
b) An increase in demand combined with a decrease in supply
c) A decrease in demand combined with an increase in supply
d) An increase in both demand and supply
View Answer
Explanation: When there is decrease in the demand of any product and the supply is eventually increased the equilibrium price will so as to maintain the sales of the product.
2. If there is a surplus of a good, then the quantity demanded _____ the quantity supplied and the price will _____
a) Is less then, rise
b) Is less than, fall
c) Is greater than, fall
d) Is greater than, rise
View Answer
Explanation: When the amount of the goods is more than the demanded then there is a fall in the price of the product to maintain the demand equilibrium of the product.
3. If both the demand and supply increase, the equilibrium quantity _____
a) Decreases and the price rise
b) Increases and the effect on price is indeterminate
c) Decreases and the effect on the price is indeterminate
d) Increases and the price falls
View Answer
Explanation: As both the demand and supply increases, the equilibrium quantity will increase but the price may increase or decrease based on the difference of increase in the supply and demand.
4. A shortage causes the _____
a) Supply curve to shift rightward
b) Price to rise
c) Price to fall
d) Demand curve to shift leftward
View Answer
Explanation: When there is a shortage of product then the demand is said to be high and at that time the price of the product is increased. By doing this the demand is decreased and the equilibrium is maintained.
5. A relative price is _____
a) Ratio of one price to another
b) The difference between one price and another
c) The slope of the supply curve
d) The slope of the demand curve
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Explanation: A relative price is the price of a product in terms of another product which is expressed in terms of a ratio between the prices of the two products.
6. 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
View Answer
Explanation: The quantity of a good demanded is inversely proportional to its price which means as the price increases the demand decreases.
7. Which of the following influences person’s buying plans and varies along a demand curve?
a) Preferences
b) The price of the good
c) Income
d) The price of the related goods
View Answer
Explanation: The price of the good decides its purchase by a person which is followed by its demand in the demand curve. More the demand more is the purchase.
8. The demand curve for a normal good shifts leftward if income_____ or the expected future price _____
a) Decreases, falls
b) Increases, rises
c) Increases, falls
d) Decreases, rises
View Answer
Explanation: When there is a decrease in the demand of the product or expected future price is less, then the demand curve for a normal good shift leftward.
9. An increase in demand combined with no change in supply causes _____
a) A decrease in demand because the supply curve does not shift
b) The equilibrium price to fall
c) A movement rightward along the demand curve
d) The equilibrium price to rise
View Answer
Explanation: With the increase in the demand with no increase in the supply the equilibrium price of the market will definitely rise.
10. If both supply and demand increase, what will be the effect on the equilibrium price and quantity?
a) The price will rise but the quantity could increase, decrease or remain the same
b) The quantity will increase but the price could rise, fall or remain the same
c) Both the price and quantity will increase
d) The price will fall but the quantity will increase
View Answer
Explanation: When both the supply and demand increase, the quantity will increase as the demand is increased but at the same time supply is also increased so the price is indeterminate.
Sanfoundry Global Education & Learning Series – Production Planning and Control.
To practice all areas of Production Planning and Control, here is complete set of Multiple Choice Questions and Answers.
