Economics Practice Test – Theory of Price Determination (Questions with Answers and Explanations)

The demand and supply functions of a commodity are given as follows: Qd = 20 - 2p Qs = 6p – 12.

Where P = price in naira, Qd = Quantity demanded and Qs = Quantity supplied.

The equilibrium price is ______ (WASSCE 2009)

A. 2 Naira      B. 4 Naira      C. 6 Naira      D. 20 Naira.

Goods are said to be in competitive demand when they are ______ (WASSCE 2013)

A. substitutes.      B. complementary.      C. jointly demanded.      D. identical.

A major function of the price mechanism is that it determines the _______ (WASSCE 2008)

A. allocation of resources.
B. amount of national savings.
C. population of the country.
D. number of goods to be taxed