#1
What is the law of demand in economics?
As the price increases, quantity demanded decreases.
As the price increases, quantity demanded increases.
As the price decreases, quantity supplied increases.
As the price decreases, quantity demanded decreases.
#2
Which of the following is NOT a determinant of demand?
Income of consumers
Price of related goods
Cost of production
Consumer preferences
#3
What is the primary function of a market economy?
To allocate resources based on government directives.
To allow individuals and businesses to make economic decisions.
To ensure that everyone has access to basic goods and services.
To eliminate competition among firms.
#4
What is consumer surplus?
The difference between the lowest price a firm is willing to accept and the price it actually receives.
The difference between the highest price a consumer is willing to pay and the price it actually pays.
The difference between the price a consumer is willing to pay and the price it actually receives.
The difference between the price a consumer is willing to pay and the price a firm is willing to accept.
#5
In a market, what is the effect of a decrease in supply?
Price increases, quantity increases.
Price increases, quantity decreases.
Price decreases, quantity increases.
Price decreases, quantity decreases.
#6
What is the law of supply in economics?
As the price increases, quantity supplied decreases.
As the price increases, quantity supplied increases.
As the price decreases, quantity demanded increases.
As the price decreases, quantity demanded decreases.
#7
What does equilibrium price signify in a market?
The price at which quantity demanded equals quantity supplied.
The maximum price a consumer is willing to pay for a good.
The price set by the government to control inflation.
The price at which quantity demanded exceeds quantity supplied.
#8
What is the main function of a price floor in a market?
To maintain a minimum price for a good or service.
To decrease the price of a good or service.
To encourage consumers to buy more of a good or service.
To decrease government intervention in the market.
#9
What is the concept of elasticity of demand?
It measures the responsiveness of quantity demanded to changes in price.
It measures the total demand for a product in the market.
It measures the sensitivity of quantity demanded to changes in income.
It measures the proportion of income spent on a product.
#10
Which of the following is a characteristic of a perfectly competitive market?
High barriers to entry
Firms are price makers
Homogeneous products
Limited number of sellers
#11
What is a monopolistic competition market structure characterized by?
A large number of firms with differentiated products.
A single seller with complete control over the market.
A few firms with identical products.
No barriers to entry or exit.
#12
What is the income effect in economics?
The change in quantity demanded due to a change in income.
The change in quantity demanded due to a change in price.
The change in quantity supplied due to a change in income.
The change in quantity supplied due to a change in price.
#13
In the context of market equilibrium, what happens when there is excess demand?
Price increases and quantity demanded exceeds quantity supplied.
Price decreases and quantity supplied exceeds quantity demanded.
Price decreases and quantity demanded equals quantity supplied.
Price increases and quantity demanded equals quantity supplied.
#14
What happens to the equilibrium price and quantity when both demand and supply increase?
Price decreases, quantity increases.
Price increases, quantity decreases.
Price increases, quantity may increase or decrease.
Price decreases, quantity remains constant.
#15
What is the difference between a change in quantity demanded and a change in demand?
A change in quantity demanded is caused by a change in price, while a change in demand is caused by factors other than price.
A change in demand is caused by a change in price, while a change in quantity demanded is caused by factors other than price.
A change in quantity demanded and a change in demand are the same.
A change in demand is not possible in a market.
#16
What is the cross-price elasticity of demand?
It measures the responsiveness of quantity demanded to changes in income.
It measures the responsiveness of quantity demanded of one good to changes in the price of another good.
It measures the responsiveness of quantity demanded to changes in the price of the same good.
It measures the responsiveness of quantity demanded to changes in the price of complementary goods.
#17
What is a price ceiling and how does it impact the market?
It is a government-imposed maximum price that can be charged for a good or service, leading to shortages.
It is a government-imposed minimum price that can be charged for a good or service, leading to surpluses.
It is a government-imposed tax on the production or sale of a good or service, leading to increased revenue.
It is a government subsidy provided to producers to encourage production of a good or service.
#18
What is the difference between a price taker and a price maker in a market?
A price taker has control over the market price, while a price maker must accept the prevailing market price.
A price taker must accept the prevailing market price, while a price maker has control over the market price.
Both a price taker and a price maker have control over the market price.
Neither a price taker nor a price maker has control over the market price.