READING 13: DEMAND AND SUPPLY ANALYSIS
— INTRODUCTION EXAM QUESTIONS WITH
SOLUTIONS 2026
Instructions: This exam contains multiple-choice questions covering the core
content of CFA Level I Reading 13: Demand and Supply Analysis: Introduction.
Topics include market types, demand and supply functions, equilibrium,
elasticity, consumer and producer surplus, and market interventions.
1. Which of the following markets is least accurately described as a
factor market?
A. The market for land
B. The market for assembly line workers
C. The market for capital market securities
Correct Answer: C — The market for capital market securities
Rationale: Factor markets are markets for factors of production (land,
labor, capital). Capital market securities are traded in capital markets,
not factor markets.
,2. Which of the following markets is most accurately defined as a goods
market?
A. The market for companies
B. The market for unskilled labor
C. The market for legal and lobbying services
Correct Answer: C — The market for legal and lobbying services
Rationale: Goods markets are markets for the output produced by
firms, such as legal and medical services. Companies and unskilled labor
are factor markets.
3. Demand is best defined as:
A. The willingness and ability of consumers to purchase a given amount
of a good or service at a given price
B. The total quantity of a good that consumers would like to purchase
C. The amount of a good that consumers can afford to purchase
Correct Answer: A — The willingness and ability of consumers to
purchase a given amount of a good or service at a given price
, Rationale: Demand requires both willingness and ability to purchase.
Desire alone is not demand.
4. The demand curve shows:
A. The lowest price buyers are willing to pay for each quantity
B. The highest price buyers are willing to pay for each quantity
C. The average price buyers are willing to pay for each quantity
Correct Answer: B — The highest price buyers are willing to pay for
each quantity
Rationale: The demand curve shows both the highest price buyers are
willing to pay for each quantity and the highest quantity buyers are
willing and able to purchase at each price.
5. Market equilibrium occurs when:
A. The quantity that buyers are willing and able to purchase equals the
quantity that sellers are willing to offer
— INTRODUCTION EXAM QUESTIONS WITH
SOLUTIONS 2026
Instructions: This exam contains multiple-choice questions covering the core
content of CFA Level I Reading 13: Demand and Supply Analysis: Introduction.
Topics include market types, demand and supply functions, equilibrium,
elasticity, consumer and producer surplus, and market interventions.
1. Which of the following markets is least accurately described as a
factor market?
A. The market for land
B. The market for assembly line workers
C. The market for capital market securities
Correct Answer: C — The market for capital market securities
Rationale: Factor markets are markets for factors of production (land,
labor, capital). Capital market securities are traded in capital markets,
not factor markets.
,2. Which of the following markets is most accurately defined as a goods
market?
A. The market for companies
B. The market for unskilled labor
C. The market for legal and lobbying services
Correct Answer: C — The market for legal and lobbying services
Rationale: Goods markets are markets for the output produced by
firms, such as legal and medical services. Companies and unskilled labor
are factor markets.
3. Demand is best defined as:
A. The willingness and ability of consumers to purchase a given amount
of a good or service at a given price
B. The total quantity of a good that consumers would like to purchase
C. The amount of a good that consumers can afford to purchase
Correct Answer: A — The willingness and ability of consumers to
purchase a given amount of a good or service at a given price
, Rationale: Demand requires both willingness and ability to purchase.
Desire alone is not demand.
4. The demand curve shows:
A. The lowest price buyers are willing to pay for each quantity
B. The highest price buyers are willing to pay for each quantity
C. The average price buyers are willing to pay for each quantity
Correct Answer: B — The highest price buyers are willing to pay for
each quantity
Rationale: The demand curve shows both the highest price buyers are
willing to pay for each quantity and the highest quantity buyers are
willing and able to purchase at each price.
5. Market equilibrium occurs when:
A. The quantity that buyers are willing and able to purchase equals the
quantity that sellers are willing to offer
