#1
Which of the following is a determinant of demand?
Price of the product
ExplanationPrice directly affects demand.
#2
In the context of demand, what is the 'ceteris paribus' assumption?
All factors are held constant except the one under consideration
ExplanationOther factors remain constant except the one studied.
#3
According to the law of demand, what is the relationship between price and quantity demanded?
Inversely proportional
ExplanationPrice decrease leads to quantity demanded increase.
#4
What is the concept of 'utility' in economics?
The satisfaction or pleasure derived from consuming a good or service
ExplanationUtility is satisfaction from consumption.
#5
What is the 'law of supply'?
As the price of a good increases, the quantity supplied increases
ExplanationPrice increase boosts supplied quantity.
#6
What is the income effect in the context of demand?
The change in demand due to a change in consumer income
ExplanationDemand shifts with changes in consumer income.
#7
If the price of substitute goods increases, what is the likely effect on the demand for the given product?
Decrease in demand
ExplanationSubstitute price increase lowers demand.
#8
What is the cross-price elasticity of demand?
A measure of how the quantity demanded of one good responds to a change in the price of another good
ExplanationIt measures responsiveness between different goods' prices.
#9
What role does advertising play in influencing the demand curve?
Increases demand by making consumers aware of the product
ExplanationAdvertising raises consumer awareness and demand.
#10
What is the difference between a movement along the demand curve and a shift in the demand curve?
A movement is a change in quantity demanded, while a shift is a change in demand
ExplanationMovement involves quantity change; shift involves demand change.
#11
What is the law of diminishing marginal utility?
As the quantity of a good consumed increases, the satisfaction derived from each additional unit decreases
ExplanationSatisfaction decreases as consumption rises.
#12
How do expectations about future prices affect current demand?
They may influence current demand
ExplanationFuture price expectations impact current demand.
#13
If the demand for a good is perfectly elastic, what can be said about the price elasticity of demand?
Elasticity is infinity
ExplanationPrice changes infinitely affect demand.
#14
How does the availability of close substitutes impact the elasticity of demand?
Increases elasticity
ExplanationMore substitutes make demand more elastic.
#15
If the demand for a normal good is income elastic, what can be inferred about the good?
It is a luxury good
ExplanationLuxury goods have elastic demand with income.