#1
What is the relationship between price and quantity demanded according to the law of demand?
Negative
ExplanationAs price rises, quantity demanded falls and vice versa.
#2
Which of the following is an example of a complementary good?
Peanut butter and jelly
ExplanationThese goods are consumed together, so changes in the price of one affect the demand for the other.
#3
What does a shift to the left of the supply curve indicate?
A decrease in supply
ExplanationLeftward shift means less supply at all price levels.
#4
Which of the following is an example of a normal good?
Luxury cars
ExplanationGoods for which demand increases as consumer income rises.
#5
What happens to the equilibrium price and quantity when there is an increase in demand and no change in supply?
Equilibrium price increases, equilibrium quantity increases
ExplanationIncrease in demand shifts the equilibrium point upwards.
#6
Which of the following would cause a rightward shift in the supply curve?
Improvement in technology
ExplanationTechnological advancement increases production efficiency, shifting supply to the right.
#7
Which of the following is likely to cause a shift in the demand curve for smartphones?
A decrease in consumer income
ExplanationReduced income affects consumer purchasing power, leading to a shift in demand.
#8
If the price of coffee increases, what happens to the equilibrium price and quantity of tea, a substitute for coffee?
Equilibrium price and quantity of tea both increase
ExplanationAn increase in coffee price prompts consumers to substitute with tea, raising its equilibrium price and quantity.
#9
Which of the following factors does not influence the elasticity of demand for a good?
Income level of consumers
ExplanationElasticity is determined by factors like availability of substitutes, necessity, and time.
#10
What happens to the equilibrium price and quantity when both supply and demand decrease?
Equilibrium price and quantity are indeterminate
ExplanationThe net effect on equilibrium is uncertain without further information on the magnitude of decrease in supply and demand.
#11
What happens to the equilibrium price and quantity when both demand and supply decrease by the same amount?
Equilibrium price and quantity both decrease
ExplanationDecreases in both demand and supply lower equilibrium price and quantity.