#1
Which of the following best defines demand in economics?
The quantity of a good or service that consumers are willing and able to buy at a given price over a specific period.
ExplanationDemand represents consumers' willingness and ability to purchase goods or services at a specified price within a certain timeframe.
#2
What does the law of demand state?
As price decreases, quantity demanded increases.
ExplanationThe law of demand asserts that when the price of a good or service decreases, the quantity demanded by consumers tends to increase.
#3
What is the law of demand?
As price decreases, quantity demanded increases.
ExplanationThe law of demand stipulates an inverse relationship between price and quantity demanded, indicating that as prices fall, the quantity demanded rises.
#4
Which of the following factors does NOT affect demand?
Cost of production.
ExplanationWhile the cost of production influences supply, it does not directly affect demand in the market.
#5
Which of the following factors can cause a shift in the demand curve?
All of the above.
ExplanationVarious factors, including changes in consumer income, preferences, expectations, and the prices of related goods, can lead to shifts in the demand curve.
#6
What is the income elasticity of demand?
A measure of how much the quantity demanded of a good responds to a change in consumer income.
ExplanationIncome elasticity of demand quantifies the sensitivity of the quantity demanded of a product to changes in consumer income.
#7
What is the price elasticity of demand?
A measure of how much the quantity demanded of a good responds to a change in the price of that good.
ExplanationPrice elasticity of demand gauges the responsiveness of the quantity demanded of a product to changes in its price.
#8
Which of the following is NOT a determinant of demand?
Price of inputs
ExplanationThe price of inputs primarily influences supply rather than demand in the market.
#9
Which of the following is an example of a complementary good?
Peanut butter and jelly
ExplanationComplementary goods, like peanut butter and jelly, are consumed together, so an increase in the price of one reduces the demand for both.
#10
What is the difference between a movement along the demand curve and a shift in the demand curve?
A movement along the demand curve is caused by a change in price, while a shift in the demand curve is caused by a change in a non-price determinant of demand.
ExplanationMovements along the demand curve are triggered by price changes, whereas shifts result from alterations in factors other than price affecting demand.
#11
What does a perfectly elastic demand curve look like?
A horizontal line.
ExplanationA perfectly elastic demand curve is depicted as a horizontal line, indicating that any change in price leads to an infinite change in quantity demanded.
#12
What is the difference between individual demand and market demand?
Individual demand refers to the quantity of a good or service demanded by one person, while market demand refers to the total quantity demanded by all consumers in the market at a given price.
ExplanationIndividual demand reflects the desires of a single consumer, whereas market demand encompasses the combined demands of all consumers in the market.
#13
What is the cross-price elasticity of demand?
A measure of how much the quantity demanded of a good responds to a change in the price of a substitute good.
ExplanationCross-price elasticity of demand quantifies the degree to which the demand for one good changes in response to a change in the price of another good, typically a substitute.
#14
What is the formula for price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price.
ExplanationPrice elasticity of demand is calculated by dividing the percentage change in quantity demanded by the percentage change in price.