#1
What is the definition of demand in economics?
The quantity of a good or service that consumers are willing to buy at a given price and time.
ExplanationDemand is the quantity of a good or service consumers are willing to buy at a specific price and time.
#2
What is the law of demand in economics?
As the price of a good or service decreases, the quantity demanded increases, and vice versa.
ExplanationThe law of demand states that as prices fall, demand rises, and vice versa.
#3
What is the concept of 'utility' in economics, particularly in relation to demand?
The satisfaction or pleasure derived from consuming a good or service.
ExplanationUtility in economics refers to the satisfaction gained from consuming goods or services.
#4
What is the concept of 'ceteris paribus' and how does it relate to the study of demand?
It means 'all else equal' and is used to isolate the impact of one variable while holding others constant.
ExplanationCeteris paribus means 'all else equal' and helps isolate the impact of specific variables in demand analysis.
#5
What is the concept of 'marginal utility' in economics, and how does it influence consumer choices?
The total satisfaction derived from consuming one more unit of a good or service.
ExplanationMarginal utility is the satisfaction gained from consuming an additional unit of a good or service, affecting consumer choices.
#6
Which of the following is not a determinant of demand?
Cost of production
ExplanationCost of production is not a determinant of demand.
#7
What is the income effect in relation to demand?
The change in demand due to a change in consumer income.
ExplanationThe income effect refers to changes in demand resulting from shifts in consumer income.
#8
Which of the following is an example of a complementary good?
Peanut butter and jelly
ExplanationPeanut butter and jelly are examples of complementary goods.
#9
What is the cross-price elasticity of demand?
The responsiveness of quantity demanded to a change in the price of a different good.
ExplanationCross-price elasticity measures how quantity demanded changes in response to price changes in other goods.
#10
How does the concept of 'inferior goods' differ from 'normal goods' in terms of demand?
The demand for inferior goods decreases as income rises, while the demand for normal goods increases.
ExplanationDemand for inferior goods decreases as income rises, whereas demand for normal goods increases.
#11
What role does consumer expectations play in affecting demand?
Consumer expectations can influence the demand for a good or service.
ExplanationConsumer expectations can significantly impact demand for goods or services.
#12
How does the substitution effect impact the elasticity of demand?
It makes demand more elastic.
ExplanationThe substitution effect increases demand elasticity.
#13
In the context of demand, what does the term 'elasticity' refer to?
The responsiveness of quantity demanded to a change in price.
ExplanationElasticity in demand refers to how quantity demanded changes in response to price fluctuations.
#14
How does the expectation of future prices affect current demand?
It increases current demand.
ExplanationExpectations of future prices rising lead to increased current demand.
#15
How does the availability of close substitutes impact the elasticity of demand?
It makes demand more elastic.
ExplanationAvailability of close substitutes increases demand elasticity.
#16
What is the concept of the 'Veblen effect' in relation to demand?
The increase in demand due to the prestige associated with a higher price.
ExplanationThe Veblen effect is the increase in demand linked to the prestige of high prices.
#17
In the context of demand, what does 'shift in the demand curve' refer to?
A change in demand caused by a factor other than price.
ExplanationA shift in the demand curve indicates changes in demand unrelated to price.
#18
How does the concept of 'time horizon' affect the elasticity of demand?
Shorter time horizons make demand more elastic.
ExplanationShorter time horizons increase demand elasticity.
#19
How does the concept of 'network effects' impact the demand for certain goods or services?
It increases demand as more people use the good or service.
ExplanationNetwork effects lead to increased demand as more individuals use a good or service.