#1
Which of the following is a determinant of demand?
Price of the product
ExplanationPrice influences demand.
#2
What is the law of demand?
As the price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#3
Which of the following factors does NOT affect consumer demand?
Cost of production
ExplanationProduction costs impact supply, not demand.
#4
What is the formula for price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationCalculation of demand sensitivity.
#5
What is the importance of understanding consumer demand for businesses?
All of the above
ExplanationCrucial for business strategy and success.
#6
What is the concept of utility in economics?
The total satisfaction derived from consuming a particular quantity of a good or service
ExplanationMeasure of consumer satisfaction.
#7
What does the income elasticity of demand measure?
The responsiveness of quantity demanded to a change in consumer income
ExplanationIt measures consumer sensitivity to income changes.
#8
What does a negative cross-price elasticity of demand indicate?
The goods are substitutes
ExplanationNegative indicates substitutes.
#9
What is the substitution effect?
The change in quantity demanded due to a change in the price of a substitute good
ExplanationImpact of substitute price change on demand.
#10
What is the difference between a normal good and an inferior good?
Normal goods have a positive income elasticity of demand, while inferior goods have a negative income elasticity of demand
ExplanationDifferentiated by income elasticity.
#11
What is the difference between elastic and inelastic demand?
Elastic demand occurs when quantity demanded changes proportionately more than price, while inelastic demand occurs when quantity demanded changes proportionately less than price
ExplanationDistinguished by responsiveness.
#12
Which of the following is NOT a determinant of price elasticity of demand?
Income of consumers
ExplanationIncome affects demand elasticity.
#13
What is the Engel curve used to represent?
The relationship between income and quantity demanded
ExplanationIt shows the income-consumption relationship.
#14
What is the Veblen effect?
The increase in demand for a luxury good as its price increases
ExplanationLuxury demand rise with price.
#15
What does the concept of consumer surplus represent?
The difference between the maximum price a consumer is willing to pay and the price they actually pay
ExplanationMeasure of consumer benefit.
#16
What is the relationship between total revenue and price elasticity of demand?
For elastic demand, an increase in price decreases total revenue; for inelastic demand, an increase in price increases total revenue
ExplanationTotal revenue response to price changes.
#17
What is the concept of a Giffen good?
A type of inferior good
ExplanationInferior good with upward demand slope.
#18
What is the relationship between price elasticity of demand and total revenue?
For elastic demand, an increase in price decreases total revenue; for inelastic demand, an increase in price increases total revenue.
ExplanationImpact of elasticity on revenue changes.