#1
Which of the following best describes the law of demand?
As the price decreases, quantity demanded increases
ExplanationInverse relationship between price and quantity demanded.
#2
What does the law of supply state?
As the price increases, quantity supplied increases
ExplanationDirect relationship between price and quantity supplied.
#3
What is elasticity of demand?
A measure of how sensitive the quantity demanded is to changes in price
ExplanationQuantifies responsiveness of quantity demanded to price changes.
#4
What is a price ceiling?
A legal maximum price that can be charged for a good or service
ExplanationGovernment-imposed limit on the price of a product or service.
#5
What is the income effect in economics?
The change in quantity demanded due to a change in income
ExplanationImpact of income changes on consumer spending.
#6
What is a normal good in economics?
A good for which demand increases as income increases
ExplanationGoods whose demand rises with income growth.
#7
What is a complementary good?
A good for which demand increases when the price of another good decreases
ExplanationProducts that are used together, with demand linked.
#8
What is the price elasticity of supply?
A measure of how sensitive the quantity supplied is to changes in price
ExplanationDegree of responsiveness of quantity supplied to price changes.
#9
What is market equilibrium?
A situation where price and quantity supplied are equal
ExplanationBalance between market demand and supply.