#1
What is the law of demand in economics?
As prices increase, quantity demanded decreases
As prices decrease, quantity demanded increases
As prices increase, quantity demanded increases
As prices decrease, quantity demanded decreases
#2
Which of the following is not a determinant of demand?
Tastes and preferences
Income
Price of the product
Number of producers
#3
In economics, what is the term used to describe the amount of a good or service that consumers are willing and able to purchase at a given price?
Supply
Demand
Equilibrium
Quantity demanded
#4
Which of the following is an example of a normal good?
Public transportation
Generic store-brand products
Ramen noodles
Luxury cars
#5
What is the concept of utility in economics?
The satisfaction or pleasure derived from consuming a good or service
The total revenue generated by selling a good or service
The total cost incurred in producing a good or service
The total profit earned from selling a good or service
#6
Which of the following is an example of a substitute good?
Butter and margarine
DVD players and DVD discs
Coffee and tea
Peanut butter and jelly
#7
What is the term used to describe the amount of satisfaction a consumer derives from consuming a good?
Marginal utility
Total utility
Consumer surplus
Diminishing returns
#8
What does the income elasticity of demand measure?
The responsiveness of quantity demanded to a change in price
The responsiveness of quantity demanded to a change in income
The responsiveness of quantity demanded to a change in tastes and preferences
The responsiveness of quantity demanded to a change in the price of related goods
#9
What is the substitution effect in economics?
When the price of one good increases, consumers switch to a substitute good
When the price of one good decreases, consumers buy more of it
When the price of one good increases, consumers buy less of it
When the price of one good decreases, consumers switch to a complementary good
#10
What is the difference between normal goods and inferior goods?
Normal goods have positive income elasticity while inferior goods have negative income elasticity
Normal goods have negative income elasticity while inferior goods have positive income elasticity
Normal goods have no income elasticity while inferior goods have positive income elasticity
Normal goods have positive income elasticity while inferior goods have no income elasticity
#11
Which of the following is an example of a complementary good?
Peanut butter and jelly
Coffee and tea
DVD players and DVD discs
Apples and oranges
#12
What does the law of diminishing marginal utility state?
The more of a good a person consumes per period, the smaller the increase in satisfaction
The more of a good a person consumes per period, the greater the increase in satisfaction
The less of a good a person consumes per period, the greater the increase in satisfaction
The less of a good a person consumes per period, the smaller the increase in satisfaction
#13
According to the law of diminishing marginal utility, what happens as a consumer consumes more of a good?
Total utility increases at a decreasing rate
Marginal utility increases
Total utility increases at an increasing rate
Marginal utility decreases
#14
What is the Engel curve used to depict?
The relationship between the price of a good and the quantity demanded
The relationship between income and the quantity demanded of a good
The relationship between the price of a good and consumer preferences
The relationship between income and consumer preferences
#15
What does the substitution effect in consumer behavior suggest about the effect of a price change on the quantity demanded of a good?
It always decreases the quantity demanded
It always increases the quantity demanded
It depends on the elasticity of demand
It is irrelevant to changes in quantity demanded
#16
What is the slope of a demand curve that has perfectly elastic demand?
Vertical
Horizontal
Positive
Negative
#17
What is the main assumption underlying the concept of consumer rationality in economics?
Consumers always maximize utility
Consumers are always fully informed about all available choices
Consumers have unlimited resources
Consumers have fixed preferences
#18
Which of the following is an example of a Giffen good?
Rice
Potatoes
Luxury cars
Bread