#1
Which of the following factors does NOT affect demand?
Cost of production
ExplanationCost of production affects supply, not demand.
#2
Which of the following is a determinant of supply?
Technology
ExplanationImprovements in technology can increase supply.
#3
Which of the following is NOT a determinant of demand?
Number of firms in the market
ExplanationThe number of firms in the market affects supply, not demand.
#4
What is the law of demand?
As quantity demanded decreases, price increases
ExplanationConsumers buy more of a good when its price decreases, and vice versa.
#5
What happens to market equilibrium price and quantity when demand increases and supply remains constant?
Price increases, quantity increases
ExplanationIncreased demand causes shortage, raising both price and quantity.
#6
If the demand for a good is inelastic, a decrease in price will result in:
A small increase in quantity demanded
ExplanationInelastic demand leads to proportionally small changes in quantity demanded.
#7
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
ExplanationPerfect competition implies numerous buyers and sellers with no individual influence on price.
#8
What is the primary determinant of price elasticity of demand?
Availability of substitutes
ExplanationThe more substitutes available, the more elastic the demand.
#9
Which of the following scenarios would lead to a decrease in demand for pizza?
An increase in consumer income
ExplanationAs consumers' income rises, they might prefer more expensive or healthier food options.
#10
What is the effect on equilibrium price and quantity when both demand and supply increase?
Price increases, quantity increases
ExplanationBoth demand and supply increase, leading to higher price and quantity.
#11
In the long run, firms in a perfectly competitive market will earn:
Normal profits
ExplanationIn the long run, competition drives profits to a normal level.
#12
What happens to equilibrium price and quantity when demand decreases and supply increases?
Price decreases, quantity decreases
ExplanationDecreased demand and increased supply lead to lower price but uncertain quantity.
#13
What happens to equilibrium price and quantity when both demand and supply decrease?
Price decreases, quantity decreases
ExplanationDecrease in both demand and supply causes a drop in price and quantity.
#14
What is the effect on equilibrium price and quantity when demand increases and supply decreases?
Price increases, quantity decreases
ExplanationIncreased demand and decreased supply result in higher price and lower quantity.