Principles of Demand and Utility Quiz

Test your knowledge with questions on law of demand, utility, elasticity, and more in this microeconomics quiz.

Practice Learn Test

Which of the following best describes the law of demand?

As prices rise, demand rises.

As prices fall, demand rises.

As prices rise, demand falls.

As prices fall, demand falls.

What is utility in economics?

The satisfaction derived from consuming a good or service.

The total amount of goods produced in an economy.

The amount of money earned by selling a product.

The cost of producing a good or service.

What is the main assumption underlying the law of demand?

Consumers have perfect information.

Consumers maximize utility.

Consumers have unlimited income.

Consumers consider only price in their purchasing decisions.

What does a downward-sloping demand curve indicate?

A direct relationship between price and quantity demanded.

An inverse relationship between price and quantity demanded.

A constant relationship between price and quantity demanded.

An irregular relationship between price and quantity demanded.

Which of the following is NOT a type of utility?

Form utility

Place utility

Process utility

Time utility

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.

What is the income effect in the context of demand?

The change in quantity demanded due to a change in income.

The change in demand due to a change in income.

The change in price due to a change in income.

The change in consumer preferences due to a change in income.

Which of the following factors does NOT influence demand elasticity?

Availability of substitutes

Necessity of the good

Time horizon

Total revenue received by producers

Which of the following is NOT a determinant of utility?

Tastes and preferences

Price of the product

Income level

Number of available substitutes

#10

Which of the following statements about elasticity of demand is true?

Elasticity measures the responsiveness of quantity demanded to changes in price.

Elasticity is always constant along a linear demand curve.

Inelastic goods have elasticity greater than 1.

Unitary elastic demand implies that a change in price will have no effect on quantity demanded.

#11

What is cross-price elasticity of demand?

Measures the responsiveness of quantity demanded of one good to a change in the price of another good.

Measures the responsiveness of quantity demanded to a change in income.

Measures the responsiveness of quantity demanded to a change in the price of the same good.

Measures the responsiveness of quantity supplied to a change in price.

#12

What is the difference between cardinal and ordinal utility?

Ordinal utility measures utility in numerical terms, while cardinal utility ranks preferences without numerical values.

Cardinal utility ranks preferences without numerical values, while ordinal utility measures utility in numerical terms.

Ordinal utility considers the total satisfaction derived, while cardinal utility considers only the relative ranking of preferences.

Cardinal utility considers the total satisfaction derived, while ordinal utility considers only the relative ranking of preferences.

#13

Which of the following is true regarding perfectly elastic demand?

The demand curve is horizontal.

The demand curve is vertical.

The demand curve is upward-sloping.

The demand curve is downward-sloping.

#14

What is the difference between total utility and marginal utility?

Total utility measures satisfaction per unit of a good, while marginal utility measures total satisfaction.

Total utility measures total satisfaction, while marginal utility measures satisfaction per unit of a good.

Total utility is constant, while marginal utility varies with consumption.

Marginal utility is constant, while total utility varies with consumption.