#1
Which of the following describes the law of demand?
As price decreases, quantity demanded increases.
ExplanationInverse relationship between price and quantity demanded.
#2
What happens to the demand curve when there is an increase in consumer income?
The demand curve shifts to the right.
ExplanationPositive shift in demand due to higher consumer income.
#3
What is the law of supply?
As price increases, quantity supplied increases.
ExplanationDirect relationship between price and quantity supplied.
#4
Which of the following is a determinant of supply?
Technology
ExplanationTechnological advancements impact supply.
#5
If the price of a substitute good increases, what happens to the demand for the original good?
The demand for the original good increases.
ExplanationDirect relationship between substitute goods.
#6
What is price elasticity of demand?
A measure of how much quantity demanded changes in response to a change in price.
ExplanationSensitivity of quantity demanded to price changes.
#7
What does a perfectly elastic supply curve look like?
Horizontal line
ExplanationSupply is infinitely responsive to price changes.
#8
What happens to equilibrium price and quantity when demand decreases and supply increases?
Price decreases, quantity decreases
ExplanationDecrease in price and quantity due to opposing shifts.
#9
Which factor does NOT affect the supply curve?
Consumer preferences
ExplanationConsumer preferences do not directly affect supply.
#10
What is the concept of consumer surplus?
The difference between the maximum price a consumer is willing to pay and the price they actually pay.
ExplanationExcess benefit gained by consumers from paying less.
#11
What is the difference between a change in quantity supplied and a change in supply?
A change in quantity supplied is caused by a change in price, while a change in supply is caused by non-price factors.
ExplanationCause of change: price for quantity supplied, non-price factors for supply.
#12
What is the concept of price ceiling in economics?
A maximum price set by the government above which the good cannot be sold.
ExplanationGovernment-imposed cap on prices.