#1
Which of the following best describes the law of demand?
As the price of a good increases, the quantity demanded decreases.
ExplanationPrice increase leads to demand decrease.
#2
What does the income effect refer to in terms of demand?
The change in quantity demanded due to a change in income.
ExplanationDemand change due to income alteration.
#3
Which of the following factors can cause a shift in the demand curve?
All of the above.
ExplanationVarious factors can alter demand curve positioning.
#4
Which of the following is NOT a determinant of the price elasticity of demand?
Price of complementary goods
ExplanationPrice of complementary goods doesn't affect elasticity.
#5
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 of a substitute good.
ExplanationIt's the demand change due to substitute price change.
#6
What does it mean if the price elasticity of demand is greater than 1?
Demand is elastic.
ExplanationElastic demand indicates quantity change with price change.
#7
What is the primary determinant of the price elasticity of supply?
Time horizon
ExplanationElasticity of supply is affected by the time frame.
#8
What does the concept of 'diminishing marginal utility' suggest?
The more of a good consumed, the less additional utility is gained from consuming one more unit.
ExplanationUtility gained decreases with additional consumption.
#9
What is the price elasticity of demand?
A measure of how sensitive quantity demanded is to changes in price.
ExplanationIt measures demand sensitivity to price changes.
#10
If the price elasticity of demand for a good is perfectly inelastic, what does this mean?
Consumers are willing to buy the same quantity of the good regardless of price changes.
ExplanationDemand quantity remains constant despite price alterations.
#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.
ExplanationIt gauges how demand for one good changes with another's price change.
#12
What is the relationship between the price elasticity of demand and total revenue?
Price elasticity of demand is inversely related to total revenue.
ExplanationRevenue changes inversely with demand elasticity.
#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.
ExplanationQuantity demanded changes with price; demand shift results from other factors.
#14
What is the relationship between price and marginal revenue for a perfectly competitive firm?
Marginal revenue is equal to price.
ExplanationIn perfect competition, marginal revenue equals price.
#15
What is a characteristic of a pure monopoly market structure?
One seller with no close substitutes.
ExplanationPure monopoly has one seller without close alternatives.