Economic Principles of Resource Demand Quiz

Test your knowledge on the law of demand, elasticity, market structures, and more. Explore key concepts in microeconomics with these challenging questions.

Practice Learn Test

Which of the following best describes the law of demand?

As the price of a good increases, the quantity demanded decreases.

As the price of a good increases, the quantity demanded increases.

As the price of a good decreases, the quantity supplied decreases.

As the price of a good decreases, the quantity supplied increases.

What does the income effect refer to in terms of demand?

The change in quantity demanded due to a change in income.

The change in quantity demanded due to a change in the price of a related good.

The change in quantity demanded due to a change in consumer preferences.

The change in quantity demanded due to a change in the price level.

Which of the following factors can cause a shift in the demand curve?

Changes in the price of the good itself.

Changes in consumer income.

Changes in the price of substitute goods.

All of the above.

Which of the following is NOT a determinant of the price elasticity of demand?

Availability of substitutes

Luxury vs. necessity

Consumer income

Price of complementary goods

In the context of resource demand, what is the substitution effect?

The change in quantity demanded of a good due to a change in the price level.

The change in quantity demanded of a good due to a change in consumer income.

The change in quantity demanded of a good due to a change in the price of a substitute good.

The change in quantity demanded of a good due to a change in consumer preferences.

What does it mean if the price elasticity of demand is greater than 1?

Demand is elastic.

Demand is inelastic.

Demand is unit elastic.

Demand is perfectly inelastic.

What is the primary determinant of the price elasticity of supply?

Availability of substitutes

Time horizon

Consumer income

Price of complementary goods

What does the concept of 'diminishing marginal utility' suggest?

As consumption increases, the total utility also increases.

The more of a good consumed, the less additional utility is gained from consuming one more unit.

Consumers always prefer more of a good to less.

The marginal utility of a good remains constant as more of it is consumed.

What is the price elasticity of demand?

A measure of how sensitive quantity demanded is to changes in price.

A measure of how sensitive quantity supplied is to changes in price.

A measure of how sensitive income is to changes in price.

A measure of how sensitive consumer preferences are to changes in price.

#10

If the price elasticity of demand for a good is perfectly inelastic, what does this mean?

Consumers are not willing to buy any quantity of the good at any price.

Consumers are willing to buy the same quantity of the good regardless of price changes.

Consumers are very sensitive to changes in the price of the good.

Consumers are willing to buy more of the good as the price increases.

#11

What does the cross-price elasticity of demand measure?

The responsiveness of quantity demanded of one good to a change in the price of another good.

The responsiveness of quantity demanded to a change in income.

The responsiveness of quantity supplied to a change in price.

The responsiveness of consumer preferences to a change in price.

#12

What is the relationship between the price elasticity of demand and total revenue?

As price elasticity of demand increases, total revenue increases.

As price elasticity of demand increases, total revenue decreases.

Price elasticity of demand has no effect on total revenue.

Price elasticity of demand is inversely related to total revenue.

#13

What is the difference between a change in quantity demanded and a shift in demand?

A change in quantity demanded is caused by a change in price, while a shift in demand is caused by a change in other factors.

A change in quantity demanded is caused by a change in income, while a shift in demand is caused by a change in price.

A change in quantity demanded is caused by a change in consumer preferences, while a shift in demand is caused by a change in quantity supplied.

A change in quantity demanded is caused by a change in quantity supplied, while a shift in demand is caused by a change in price.

#14

What is the relationship between price and marginal revenue for a perfectly competitive firm?

Marginal revenue is equal to price.

Marginal revenue is greater than price.

Marginal revenue is less than price.

There is no relationship between price and marginal revenue.

#15

What is a characteristic of a pure monopoly market structure?

Many buyers and many sellers with differentiated products.

Few buyers and many sellers with identical products.

Many buyers and few sellers with identical products.

One seller with no close substitutes.