#1
Which of the following is NOT a determinant of demand?
Income of the consumers
Price of the product
Price of related goods
Government regulations
#2
What does the law of demand state?
As price increases, quantity demanded increases
As price decreases, quantity demanded increases
As price increases, quantity demanded decreases
As price decreases, quantity demanded decreases
#3
Which of the following is a determinant of supply?
Consumer preferences
Government policies
Price of related goods
Number of buyers
#4
What is the law of supply?
As price increases, quantity supplied increases
As price decreases, quantity supplied increases
As price increases, quantity supplied decreases
As price decreases, quantity supplied decreases
#5
If the price of a substitute good increases, what is the likely effect on the demand for the original good?
Increase
Decrease
Remain unchanged
Depends on the cross-elasticity of demand
#6
Which of the following is a characteristic of a perfectly competitive market?
A large number of buyers and sellers
Product differentiation
Barriers to entry
Control over price by individual firms
#7
What happens to equilibrium price and quantity if both demand and supply increase?
Price decreases, quantity increases
Price increases, quantity decreases
Price increases, quantity increases
Price decreases, quantity decreases
#8
Which of the following statements is true regarding a market in long-run equilibrium under perfect competition?
Price is equal to marginal revenue
Price is equal to marginal cost
Price is equal to average total cost
Price is equal to average variable cost
#9
What is the main difference between a monopoly and monopolistic competition?
Number of firms in the market
Degree of product differentiation
Barriers to entry
Control over price by individual firms
#10
What does the cross-price elasticity of demand measure?
The responsiveness of quantity demanded to a change in income
The responsiveness of quantity demanded to a change in price
The responsiveness of quantity demanded to a change in the price of related goods
The responsiveness of quantity demanded to a change in tastes and preferences
#11
What is the law of diminishing marginal utility?
As consumption increases, total utility increases
As consumption increases, marginal utility decreases
As consumption decreases, marginal utility increases
As consumption decreases, total utility increases
#12
What does the income elasticity of demand measure?
The responsiveness of quantity demanded to a change in income
The responsiveness of quantity demanded to a change in price
The responsiveness of quantity demanded to a change in the price of related goods
The responsiveness of quantity demanded to a change in tastes and preferences
#13
In a monopolistic competition market, firms differentiate their products to:
Increase price elasticity of demand
Decrease price elasticity of demand
Maintain a standardized product
Achieve perfect competition
#14
What is a Giffen good?
A good for which demand increases as income increases
A good for which demand decreases as income increases
A good for which the income effect dominates the substitution effect
A good for which the substitution effect dominates the income effect
#15
What is the difference between a normal good and an inferior good?
Normal goods are of higher quality than inferior goods
Normal goods have a positive income elasticity of demand, while inferior goods have a negative income elasticity of demand
Normal goods are necessities, while inferior goods are luxury items
Normal goods have a negative income elasticity of demand, while inferior goods have a positive income elasticity of demand
#16
What is the price elasticity of demand for a perfectly elastic demand curve?
Zero
Greater than 1
Equal to 1
Infinity
#17
If the demand for a good is perfectly inelastic, what is the elasticity coefficient equal to?