#1
Which of the following is a determinant of demand?
Price of substitute goods
ExplanationSubstitute goods' price affects demand.
#2
The law of demand states that, all else being equal, as the price of a good increases, what happens to quantity demanded?
Decreases
ExplanationDemand decreases as price rises.
#3
What is the 'law of supply' in economics?
It states that as the price of a good increases, the quantity supplied increases, all else being equal
ExplanationSupply quantity increases with price rise.
#4
What does 'market equilibrium' represent?
A situation where the quantity demanded equals the quantity supplied
ExplanationEquilibrium is when demand equals supply.
#5
What does the term 'utility' refer to in economics?
The satisfaction or pleasure derived from consuming a good or service
ExplanationUtility is satisfaction from consumption.
#6
What does the 'income effect' describe in terms of consumer behavior?
The change in quantity demanded due to a change in income
ExplanationIncome change affects quantity demanded.
#7
What is the difference between a normal good and an inferior good?
Normal goods have a positive income elasticity of demand, while inferior goods have a negative income elasticity of demand
ExplanationNormal goods' demand rises with income, inferior falls.
#8
What does the term 'consumer surplus' represent in economics?
The difference between the total amount a consumer is willing to pay for a good and the amount they actually pay
ExplanationSurplus is the excess between willingness and payment.
#9
What is the law of diminishing returns in economics?
It states that as more units of a variable input are added to a fixed input, the marginal product of the variable input eventually decreases
ExplanationAdding variable input decreases marginal returns.
#10
Which of the following statements accurately describes 'elasticity of demand'?
It measures the responsiveness of quantity demanded to changes in price
ExplanationElasticity gauges demand's price sensitivity.
#11
What is the concept of 'diminishing marginal utility'?
It states that as a consumer consumes more units of a good, the additional satisfaction or utility derived from each additional unit decreases
ExplanationSatisfaction decreases with more consumption.
#12
What is the difference between 'substitution effect' and 'income effect'?
Substitution effect refers to the change in quantity demanded due to a change in price, while income effect refers to the change in quantity demanded due to a change in income
ExplanationPrice change drives substitution, income affects demand.
#13
What does 'Veblen goods' refer to in economics?
Goods whose demand increases as their price increases, often due to their perceived status or luxury value
ExplanationStatus or luxury elevates demand with price.
#14
In the context of consumer behavior, what does 'rational choice' refer to?
The tendency for consumers to make decisions that maximize their total utility or satisfaction
ExplanationConsumers maximize utility in decision-making.