#1
In economics, what does the term 'market equilibrium' refer to?
A situation where quantity demanded equals quantity supplied
ExplanationBalance between demand and supply.
#2
Which of the following is a determinant of demand in economics?
Price of substitutes
ExplanationAvailability and price of alternative products.
#3
What is the law of demand in economics?
As price decreases, quantity demanded increases
ExplanationInverse relationship between price and quantity demanded.
#4
Which of the following is NOT a determinant of supply?
Consumer preferences
ExplanationIndividual tastes and preferences do not directly impact supply.
#5
What is the definition of 'price elasticity of demand' in economics?
The percentage change in quantity demanded divided by the percentage change in price
ExplanationPercentage change in demand resulting from percentage change in price.
#6
Which of the following is NOT a determinant of price elasticity of demand?
Income level
ExplanationIncome level does not directly affect price elasticity of demand.
#7
What happens to market equilibrium price and quantity if both demand and supply increase?
Price increases, quantity increases
ExplanationBoth demand and supply pull prices and quantity upwards.
#8
If the government imposes a price floor above the equilibrium price, what is the likely effect?
Excess supply
ExplanationSurplus of goods as quantity supplied exceeds demand.
#9
What happens to market equilibrium price and quantity if demand decreases and supply increases?
Price decreases, quantity increases
ExplanationPrice falls due to reduced demand while quantity supplied rises.
#10
If the government imposes a price ceiling below the equilibrium price, what is the likely effect?
Excess demand
ExplanationShortage of goods as quantity demanded exceeds supply.
#11
What is the effect on equilibrium price and quantity if both demand and supply decrease?
Price decreases, quantity decreases
ExplanationPrice and quantity both decline due to decreased demand and supply.
#12
If the government imposes an excise tax on a good, how does it affect the market equilibrium?
Increases equilibrium price, decreases equilibrium quantity
ExplanationTax raises price paid by consumers and reduces quantity sold.
#13
What does the term 'elasticity' measure in economics?
The responsiveness of quantity demanded to a change in price
ExplanationSensitivity of demand to price fluctuations.
#14
What does the term 'cross-price elasticity of demand' measure?
The responsiveness of quantity demanded of one good to a change in the price of another good
ExplanationHow demand for one product changes with price alterations of another.
#15
What is 'consumer surplus' in economics?
The difference between the price consumers are willing to pay and the price they actually pay
ExplanationGained utility from purchasing a product at a lower price than one is willing to pay.
#16
What is 'producer surplus' in economics?
The difference between the price producers are willing to sell for and the price they actually sell for
ExplanationBenefit gained by producers selling at a higher price than their minimum acceptable price.
#17
What is the concept of 'deadweight loss' in economics?
Loss of total surplus due to a market inefficiency
ExplanationWelfare loss caused by inefficient allocation of resources.