--- title: "CA Foundation | Determination of Prices MCQ Test | Chanakya Commerce Classes" description: "CA Foundation Paper 4 Business Economics Chapter 4 Unit 2 Determination of Prices MCQ test page with instant scoring by Chanakya Commerce Classes." canonical: "https://www.chanakyaclasses.com/mcqs/determination-of-prices" source_file: "study/determination-of-prices.php" mirror_type: "markdown" last_updated: "2026-04-12" --- # CA Foundation | Determination of Prices MCQ Test | Chanakya Commerce Classes CA Foundation Paper 4 Business Economics Chapter 4 Unit 2 Determination of Prices MCQ test page with instant scoring by Chanakya Commerce Classes. Canonical URL: https://www.chanakyaclasses.com/mcqs/determination-of-prices ← Back to Business Economics Business Economics MCQ Determination of Prices MCQ Test Attempt the questions below and review your score instantly. CA Foundation · Paper 4 · Business Economics Chapter 4 · Unit 2 · Determination of Prices MCQ Test Page · CA Foundation level · ICAI pattern · instant scoring and answer review 30 MCQs Foundation Level Past Exam Style How to Use This Test Select one option for each question. Click Submit Test to see your score instantly. Correct answers will be shown in green and wrong selections in red. Explanations are shown below each question after submission. Click Reset Test to attempt again. Question 01 In a market economy, price of a commodity is generally determined by: government order alone interaction of demand and supply cost of production alone seller’s wish alone Market price is determined through the interaction of market demand and market supply. Question 02 The equilibrium price is the price at which: demand is maximum supply is zero demand curve is horizontal quantity demanded equals quantity supplied Equilibrium price is the price at which market demand equals market supply. Question 03 The quantity bought and sold at equilibrium price is called: equilibrium quantity average quantity surplus quantity reserve quantity The quantity corresponding to the equilibrium price is called equilibrium quantity. Question 04 If at a given price quantity demanded exceeds quantity supplied, the situation is called: surplus equilibrium excess demand or shortage excess supply When quantity demanded is more than quantity supplied, there is excess demand or shortage. Question 05 If at a given price quantity supplied exceeds quantity demanded, the situation is called: scarcity excess supply or surplus market clearing consumer equilibrium When quantity supplied is greater than quantity demanded, there is excess supply or surplus. Question 06 When there is excess demand in the market, price tends to: fall remain fixed always become zero rise Shortage creates upward pressure on price. Question 07 When there is excess supply in the market, price tends to: fall rise become maximum remain fixed forever Surplus creates downward pressure on price. Question 08 The market is in equilibrium when: buyers are dissatisfied price is highest there is no tendency for price to change supply is greater than demand At equilibrium, there is no inherent pressure for price to rise or fall. Question 09 If demand increases while supply remains unchanged, equilibrium price will generally: fall rise remain unchanged always become zero A rightward shift in demand, with supply unchanged, raises equilibrium price. Question 10 If demand decreases while supply remains unchanged, equilibrium price will generally: rise remain fixed always increase sharply fall A leftward shift in demand lowers equilibrium price when supply is unchanged. Question 11 If supply increases while demand remains unchanged, equilibrium price will tend to: fall rise remain unchanged always become maximum A rightward shift in supply lowers equilibrium price. Question 12 If supply decreases while demand remains unchanged, equilibrium price will tend to: fall remain unchanged rise become zero A leftward shift in supply raises equilibrium price. Question 13 A simultaneous increase in both demand and supply will definitely increase: price only equilibrium quantity price and reduce quantity nothing at all If both demand and supply increase, equilibrium quantity rises for sure, but price may rise, fall, or remain unchanged depending on the extent of the shifts. Question 14 A simultaneous decrease in both demand and supply will definitely decrease: equilibrium quantity price only price always and everywhere none of these If both demand and supply decrease, equilibrium quantity falls for sure, while price is uncertain. Question 15 The intersection point of demand curve and supply curve indicates: maximum price minimum output consumer surplus only market equilibrium Demand-supply intersection gives equilibrium price and equilibrium quantity. Question 16 At a price above equilibrium price, there will be: excess demand market equilibrium excess supply zero supply Above equilibrium price, sellers want to sell more than buyers want to buy, creating surplus. Question 17 At a price below equilibrium price, there will be: excess supply excess demand equilibrium supply normal profit Below equilibrium price, buyers demand more than sellers supply, causing shortage. Question 18 Which of the following best describes the function of price in market equilibrium? it acts as a balancing force between demand and supply it removes demand completely it fixes supply by law it makes all markets monopolistic Price adjusts to balance market demand and market supply. Question 19 If demand and supply are both equal at ₹50 and 100 units, then ₹50 is the: reservation price support price minimum price equilibrium price When demand equals supply at a price, that price is the equilibrium price. Question 20 If demand schedule and supply schedule show equality at 200 units, then 200 units is the: surplus quantity deficient quantity equilibrium quantity market reserve The quantity at which demand equals supply is equilibrium quantity. Question 21 An increase in income that raises demand for a normal good, other things remaining same, will: lower both price and quantity raise equilibrium price and quantity lower price and raise quantity leave quantity unchanged Higher demand with unchanged supply raises both equilibrium price and equilibrium quantity. Question 22 Improvement in production technology generally affects price determination through: increase in supply decrease in demand fixed consumer taste elimination of buyers Better technology tends to increase supply, which generally lowers price and raises quantity. Question 23 If demand decreases and supply increases simultaneously, equilibrium price will: rise remain unchanged always be uncertain fall Lower demand and higher supply both push equilibrium price downward. Question 24 If demand increases and supply decreases simultaneously, equilibrium price will: rise fall remain unchanged always be zero Higher demand and lower supply both push equilibrium price upward. Question 25 If market price is above equilibrium price, sellers will tend to: withhold all supply face excess demand reduce price to clear excess supply buy from consumers At a price above equilibrium, surplus emerges and competitive pressure tends to reduce price. Question 26 If market price is below equilibrium price, buyers will compete and this tends to: reduce price further push price upward eliminate demand increase surplus At a price below equilibrium, shortage pushes price upward toward equilibrium. Question 27 The schedule that shows quantities buyers are willing to buy at different prices is called: supply schedule cost schedule revenue schedule demand schedule Demand schedule shows quantities demanded at different prices. Question 28 The schedule that shows quantities sellers are willing to offer at different prices is called: supply schedule demand schedule utility schedule income schedule Supply schedule shows quantities supplied at various prices. Question 29 Which of the following is true at equilibrium price? there is always excess demand there is always excess supply market demand equals market supply price becomes minimum for all time That equality is the defining condition of equilibrium price. Question 30 The basic force that moves a market from disequilibrium toward equilibrium is: fixed cost price adjustment under excess demand or excess supply consumer ignorance taxation only Price rises under shortage and falls under surplus, moving the market toward equilibrium. Submit Test Reset Test Test Result 0% Your performance summary will appear here. 0 Total 0 Attempted 0 Correct 0 Wrong 0 Unanswered Chanakya Commerce Classes MCQ Test · Chapter 4 · Unit 2 · Determination of Prices