#1
1. What is the law of demand?
As price increases, quantity demanded decreases
As price increases, quantity demanded increases
As price decreases, quantity demanded decreases
As price decreases, quantity demanded increases
#2
2. Which of the following is not a determinant of supply?
Technology
Number of buyers
Input prices
Expectations of future prices
#3
6. What is the relationship between price and quantity supplied in the law of supply?
Directly proportional
Inversely proportional
No relationship
Exponential
#4
7. Which factor does not affect the price elasticity of demand?
Availability of substitutes
Necessity of the good
Time horizon
Consumer income
#5
11. What is the income elasticity of demand for a normal good?
Positive
Negative
Zero
Undefined
#6
12. Which market structure is characterized by a large number of sellers, differentiated products, and easy entry and exit?
Monopoly
Oligopoly
Monopolistic competition
Perfect competition
#7
16. What is the role of the Federal Reserve in the context of monetary policy?
Control inflation by adjusting taxes
Regulate international trade agreements
Manage interest rates and money supply
Supervise government spending
#8
17. How does a binding price floor affect the market for a good?
Results in a surplus of the good
Results in a shortage of the good
No impact on the market
Causes a shift in the demand curve
#9
21. What is the concept of price elasticity of supply?
Percentage change in quantity supplied / Percentage change in price
Percentage change in price / Percentage change in quantity supplied
Total quantity supplied / Total price
Total price / Total quantity supplied
#10
22. Which factor is not a determinant of demand elasticity?
Availability of close substitutes
Necessity of the good
Time horizon
Consumer preferences
#11
3. What is the price elasticity of demand formula?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Total quantity demanded / Total price
Total price / Total quantity demanded
#12
4. In a competitive market, what happens if there is excess demand?
Price increases and quantity demanded increases
Price decreases and quantity demanded decreases
Price increases and quantity demanded decreases
Price decreases and quantity demanded increases
#13
8. What is the primary function of a price ceiling?
To prevent the price from falling below a certain level
To prevent the price from rising above a certain level
To encourage price competition
To regulate the quantity supplied
#14
9. How does an increase in consumer income affect the demand curve?
Shifts the demand curve to the left
Shifts the demand curve to the right
Results in movement along the demand curve
Has no effect on the demand curve
#15
13. What is the cross-price elasticity of demand formula?
Percentage change in quantity demanded of one good / Percentage change in price of another good
Percentage change in price of one good / Percentage change in quantity demanded of another good
Total quantity demanded of one good / Total price of another good
Total price of one good / Total quantity demanded of another good
#16
14. How does a subsidy affect the supply curve?
Shifts the supply curve to the left
Shifts the supply curve to the right
Results in movement along the supply curve
Has no effect on the supply curve
#17
18. What is the significance of the elasticity coefficient in determining the responsiveness of quantity demanded to a price change?
A higher coefficient indicates inelastic demand
A lower coefficient indicates inelastic demand
A higher coefficient indicates elastic demand
A lower coefficient indicates elastic demand
#18
19. In the context of market structures, what is a characteristic of a natural monopoly?
Many sellers offering identical products
Barriers to entry are low
Single seller dominating the market
Differentiated products with advertising
#19
23. What happens to equilibrium price and quantity if both demand and supply increase?
Price increases, quantity increases
Price decreases, quantity decreases
Price increases, quantity may increase or decrease
Price decreases, quantity may increase or decrease
#20
24. How does a decrease in the cost of production affect the supply curve?
Shifts the supply curve to the left
Shifts the supply curve to the right
Results in movement along the supply curve
Has no effect on the supply curve
#21
5. What is the concept of price floors?
A legal minimum price below which a good cannot be sold
A legal maximum price above which a good cannot be sold
A voluntary agreement among firms to limit production
A tax imposed on the production or sale of a good
#22
10. In a perfectly competitive market, what is the long-run outcome regarding economic profit?
Economic profit is always positive
Economic profit is always zero
Economic profit is always negative
Economic profit fluctuates randomly
#23
15. What is the concept of price discrimination?
Charging different prices to different customers for the same product
Illegal pricing strategy
Setting a fixed price for a product in all markets
Collusion between sellers to fix prices
#24
20. What is the primary function of a central bank in a country's economy?
To regulate fiscal policy
To issue currency and control money supply
To set prices for goods and services
To enforce trade policies
#25
25. In the context of market forces, what is a characteristic of monopolistic competition?
Few sellers offering identical products
Barriers to entry are low
Single seller dominating the market
Differentiated products with some pricing power