#1
What is the law of demand?
As price decreases, quantity demanded increases
ExplanationInverse relationship between price and quantity demanded
#2
What happens to consumer surplus when price decreases?
It increases
ExplanationConsumer surplus rises with price drop
#3
Which of the following is an example of a complementary good?
Peanut butter and jelly
ExplanationGoods consumed together
#4
Which of the following is an example of a substitute good?
Tennis balls and tennis rackets
ExplanationGoods that can replace each other
#5
Which of the following is a determinant of supply?
Technology
ExplanationTechnology affects supply
#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
ExplanationIncreased demand due to higher income
#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
ExplanationSensitivity of quantity demanded to price changes
#8
Which of the following is not a determinant of demand?
Price of the good itself
ExplanationPrice is not a determinant of demand
#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
ExplanationShift due to factors, movement due to price change
#10
Which of the following statements is true regarding the concept of demand elasticity?
Inelastic demand means that quantity demanded changes proportionately less than price
ExplanationInelastic demand: quantity changes less 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
ExplanationConsumer gain from paying less than their maximum
#12
What is the difference between normal goods and inferior goods?
Normal goods are consumed more as income increases, while inferior goods are consumed less as income increases
ExplanationIncome increase affects consumption differently
#13
What is the concept of price elasticity of supply?
A measure of how quantity supplied changes in response to a change in price
ExplanationSupplier response to price change
#14
What is the income elasticity of demand for normal goods?
Positive
ExplanationDemand increases with increasing income
#15
What is the cross-price elasticity of demand between complements?
Negative
ExplanationComplements' demand decreases with price increase
#16
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationElasticity formula: % change in quantity / % change in price
#17
What is the effect of an increase in the price of a complementary good on the demand for the main good?
It decreases the demand for the main good
ExplanationComplement price rise reduces demand for main good
#18
What is the relationship between price elasticity of demand and total revenue?
When demand is inelastic, an increase in price decreases total revenue
ExplanationInelastic demand leads to revenue decrease with price rise
#19
Which of the following is a characteristic of perfectly elastic demand?
The price elasticity of demand is infinite
ExplanationDemand quantity infinitely responsive to price
#20
Which of the following is a characteristic of perfectly inelastic demand?
The price elasticity of demand is zero
ExplanationNo change in quantity demanded with price change