#1
What is the law of demand?
As price decreases, quantity demanded decreases
As price decreases, quantity demanded increases
As price increases, quantity supplied increases
As price increases, quantity demanded decreases
#2
What happens to consumer surplus when price decreases?
It decreases
It increases
It remains constant
It becomes negative
#3
Which of the following is an example of a complementary good?
Peanut butter and jelly
Coffee and tea
Pizza and hamburgers
Butter and margarine
#4
Which of the following is an example of a substitute good?
Tennis balls and tennis rackets
Bread and butter
Peanut butter and jelly
Coffee and tea
#5
Which of the following is a determinant of supply?
Taste and preferences
Price of related goods
Technology
Income of consumers
#6
What happens to the demand curve when there is an increase in consumer income for a normal good?
The demand curve shifts to the right
The demand curve shifts to the left
There is no change in the demand curve
The demand curve becomes steeper
#7
What is elasticity of demand?
A measure of how much the quantity demanded of a good responds to a change in the price of that good
A measure of how much the quantity demanded of a good responds to a change in consumer income
A measure of how much the quantity supplied of a good responds to a change in the price of that good
A measure of how much the quantity supplied of a good responds to a change in consumer income
#8
Which of the following is not a determinant of demand?
Taste and preferences
Income of consumers
Price of the good itself
Price of related goods
#9
What is the difference between a shift in demand and a movement along the demand curve?
A shift in demand is caused by changes in factors other than price, while a movement along the demand curve is caused by a change in price
A shift in demand is caused by a change in price, while a movement along the demand curve is caused by changes in factors other than price
There is no difference between them
A shift in demand and a movement along the demand curve both occur due to changes in price
#10
Which of the following statements is true regarding the concept of demand elasticity?
Inelastic demand means that quantity demanded changes proportionately more than price
Elastic demand means that quantity demanded changes proportionately less than price
Inelastic demand means that quantity demanded changes proportionately less than price
Elastic demand means that quantity demanded changes proportionately more than price
#11
What is the concept of consumer surplus?
The difference between the maximum price a consumer is willing to pay and the actual price they pay
The difference between the minimum price a consumer is willing to pay and the actual price they pay
The difference between the price a consumer is willing to pay and the marginal cost of production
The difference between the price a consumer is willing to pay and the price a producer is willing to accept
#12
What is the difference between normal goods and inferior goods?
Normal goods are necessities, while inferior goods are luxury items
Normal goods have a positive income elasticity, while inferior goods have a negative income elasticity
Normal goods are consumed more as income increases, while inferior goods are consumed less as income increases
There is no difference between them
#13
What is the concept of price elasticity of supply?
A measure of how quantity supplied changes in response to a change in price
A measure of how quantity demanded changes in response to a change in price
A measure of how quantity supplied changes in response to a change in consumer income
A measure of how quantity demanded changes in response to a change in consumer income
#14
What is the income elasticity of demand for normal goods?
Positive
Negative
Zero
Undefined
#15
What is the cross-price elasticity of demand between complements?
Positive
Negative
Zero
Undefined
#16
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Change in quantity demanded / Change in price
Change in price / Change in quantity demanded
#17
What is the effect of an increase in the price of a complementary good on the demand for the main good?
It increases the demand for the main good
It decreases the demand for the main good
It has no effect on the demand for the main good
It depends on the elasticity of demand for the main good
#18
What is the relationship between price elasticity of demand and total revenue?
When demand is elastic, an increase in price decreases total revenue
When demand is elastic, an increase in price increases total revenue
When demand is inelastic, an increase in price decreases total revenue
When demand is inelastic, an increase in price increases total revenue
#19
Which of the following is a characteristic of perfectly elastic demand?
The price elasticity of demand is infinite
The price elasticity of demand is equal to 1
The price elasticity of demand is less than 1
The price elasticity of demand is greater than 1
#20
Which of the following is a characteristic of perfectly inelastic demand?
The price elasticity of demand is zero
The price elasticity of demand is equal to 1
The price elasticity of demand is less than 1
The price elasticity of demand is infinite