#1
Which of the following best describes the law of demand?
As price decreases, quantity demanded increases
ExplanationInverse relationship between price and quantity demanded.
#2
What is the main determinant of demand?
Price of the product
ExplanationPrimary factor influencing consumer demand.
#3
Which of the following is a non-price determinant of demand?
Consumer income
ExplanationFactors other than price affecting demand.
#4
What does a downward-sloping demand curve indicate?
As price increases, quantity demanded increases
ExplanationBasic representation of the law of demand.
#5
What is the relationship between price and quantity demanded according to the law of demand?
Inversely proportional
ExplanationOpposite movements between price and quantity.
#6
Which of the following is NOT a determinant of demand?
Cost of production
ExplanationFactor affecting supply, not demand.
#7
Which of the following is a determinant of supply but NOT of demand?
Price of inputs
ExplanationFactor affecting production costs.
#8
Which of the following is likely to cause a decrease in demand for a product?
An increase in the price of a substitute
ExplanationSubstitution effect leads to lower demand.
#9
What is the income elasticity of demand if a 10% increase in income leads to a 15% increase in the quantity demanded?
1.67
ExplanationLuxury good with elastic demand.
#10
What is the price elasticity of demand formula?
Percentage change in quantity demanded divided by percentage change in price
ExplanationMeasurement of responsiveness of demand to price change.
#11
If the cross-price elasticity of demand between two goods is negative, what does it imply about their relationship?
They are complements
ExplanationGoods consumed together; negative relationship.
#12
What does a perfectly elastic demand curve look like?
Horizontal line
ExplanationInfinitely responsive to price changes.
#13
If the price of a good increases by 10% and the quantity demanded decreases by 5%, what is the price elasticity of demand?
0.5
ExplanationInelastic demand, less responsive to price changes.
#14
What is the law of diminishing marginal utility?
As more units of a good are consumed, the additional satisfaction gained from each additional unit decreases
ExplanationDecreasing satisfaction with additional consumption.
#15
Which of the following statements is true regarding the elasticity of demand for a necessity?
The demand is relatively inelastic
ExplanationLess responsive to price changes due to necessity.
#16
What is the income elasticity of demand if a 20% increase in income leads to a 10% increase in the quantity demanded?
0.2
ExplanationInferior good with low responsiveness.
#17
Which of the following factors does NOT affect the price elasticity of demand?
Necessity of the good
ExplanationNature of the good's necessity is not a factor.
#18
Which of the following would most likely cause a shift to the right in the demand curve for oranges?
A decrease in consumer income
ExplanationIncrease in demand due to inferior good effect.
#19
What happens to the equilibrium price and quantity when both demand and supply increase?
Price increases, quantity increases
ExplanationEquilibrium shift due to both demand and supply.
#20
In the context of demand, what is 'utility'?
The total satisfaction received from consuming a good or service
ExplanationMeasure of satisfaction derived from consumption.
#21
If the demand for a product is perfectly elastic, what is the value of the price elasticity of demand?
Infinity
ExplanationInfinitely responsive to price changes.
#22
What is the primary difference between a shift in the demand curve and a movement along the demand curve?
A shift in the demand curve results from a change in price, while a movement along the demand curve results from a change in other factors
ExplanationPrice change vs. other determinants.
#23
What is the primary determinant of a good's price elasticity of supply?
The time period considered
ExplanationDegree of responsiveness over time.
#24
What does it mean if the price elasticity of demand for a good is greater than 1?
Demand is elastic
ExplanationHigh responsiveness to price changes.
#25
What is the formula for calculating price elasticity of demand using the midpoint method?
((Q2 - Q1) / (Q1 + Q2)) / ((P2 - P1) / (P1 + P2))
ExplanationMethod to calculate elasticity at any point on a demand curve.