#1
Which of the following best describes the law of demand?
As prices rise, demand falls.
ExplanationHigher prices discourage buyers.
#2
What is utility in economics?
The satisfaction derived from consuming a good or service.
ExplanationUtility is the measure of satisfaction.
#3
What is the main assumption underlying the law of demand?
Consumers maximize utility.
ExplanationConsumers act rationally to maximize satisfaction.
#4
What does a downward-sloping demand curve indicate?
An inverse relationship between price and quantity demanded.
ExplanationAs price falls, demand rises.
#5
Which of the following is NOT a type of utility?
Process utility
ExplanationProcess utility is not a recognized form of utility.
#6
What is the law of diminishing marginal utility?
As consumption increases, marginal utility decreases.
ExplanationSatisfaction decreases with each additional unit consumed.
#7
What is the income effect in the context of demand?
The change in quantity demanded due to a change in income.
ExplanationIncome variation affects purchasing power.
#8
Which of the following factors does NOT influence demand elasticity?
Total revenue received by producers
ExplanationProducer revenue does not directly impact elasticity.
#9
Which of the following is NOT a determinant of utility?
Price of the product
ExplanationPrice does not determine utility.
#10
Which of the following statements about elasticity of demand is true?
Elasticity measures the responsiveness of quantity demanded to changes in price.
ExplanationElasticity quantifies sensitivity to price changes.
#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.
ExplanationIt measures substitution between goods.
#12
What is the difference between cardinal and ordinal utility?
Cardinal utility considers the total satisfaction derived, while ordinal utility considers only the relative ranking of preferences.
ExplanationOne measures total satisfaction, the other ranks preferences.
#13
Which of the following is true regarding perfectly elastic demand?
The demand curve is horizontal.
ExplanationPrice change results in infinite quantity change.
#14
What is the difference between total utility and marginal utility?
Total utility measures total satisfaction, while marginal utility measures satisfaction per unit of a good.
ExplanationOverall satisfaction vs. per unit satisfaction.