#1
What does the law of demand state?
As the price of a good increases, the quantity demanded increases.
As the price of a good decreases, the quantity demanded decreases.
As the price of a good increases, the quantity demanded decreases.
As the price of a good decreases, the quantity demanded increases.
#2
Which of the following is NOT a determinant of demand?
Tastes and preferences
Income
Price of substitute goods
Price of the product
#3
What does elasticity of demand measure?
The responsiveness of quantity demanded to changes in price
The slope of the demand curve
The relationship between demand and supply
The quantity demanded at a specific price
#4
In the long run, a perfectly competitive firm will earn ______ profit.
Supernormal
Normal
Abnormal
Economic
#5
What is a price ceiling?
A legal minimum price for a good or service
A legal maximum price for a good or service
A government subsidy for producers
A tax imposed on consumers
#6
What is the main assumption of the law of diminishing marginal utility?
All goods are perfectly divisible
Utility can only be measured in monetary terms
The more of a good a person consumes, the greater the additional satisfaction derived from each additional unit
The total utility of a good decreases as more of it is consumed in a given period
#7
What is the main difference between a change in quantity demanded and a change in demand?
A change in quantity demanded is caused by a change in price, while a change in demand is caused by non-price factors.
A change in quantity demanded is caused by non-price factors, while a change in demand is caused by a change in price.
Both a change in quantity demanded and a change in demand are caused by changes in price.
Both a change in quantity demanded and a change in demand are caused by non-price factors.
#8
Which of the following is NOT a characteristic of a perfectly competitive market?
Many buyers and sellers
Identical products
Barriers to entry and exit
Perfect information
#9
What is the income effect in economics?
The change in quantity demanded of a good due to a change in its price
The change in consumption of a good due to a change in consumer income
The change in quantity demanded of a good due to changes in the price of other goods
The change in consumer surplus due to a change in market equilibrium
#10
What is consumer surplus?
The difference between the maximum price consumers are willing to pay and the price they actually pay
The difference between the quantity demanded and the quantity supplied at a given price
The amount a consumer is willing to pay for a good
The excess production cost incurred by producers
#11
What is a characteristic of a monopolistic competition market structure?
Many firms producing identical products
A single seller with complete control over the market
Easy entry and exit of firms
Homogeneous products
#12
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
Absolute change in quantity demanded / Absolute change in price
Absolute change in price / Absolute change in quantity demanded
#13
In economics, what is the term for the situation where one party in a transaction has more information than the other?
Market failure
Asymmetric information
Monopoly power
Externalities
#14
What happens to equilibrium price and quantity when both demand and supply decrease?
Price increases and quantity decreases
Price decreases and quantity increases
Price decreases and quantity decreases
Price and quantity remain unchanged
#15
What does the cross-price elasticity of demand measure?
The responsiveness of quantity demanded of one good to a change in the price of another good
The responsiveness of quantity demanded to a change in income
The slope of the demand curve
The responsiveness of quantity demanded to a change in price
#16
Which of the following is an example of a public good?
Electricity
A private beach resort
Street lighting
Cable television