#1
Which of the following best defines the law of demand?
As price increases, quantity demanded decreases, ceteris paribus.
ExplanationInverse relationship between price and quantity demanded.
#2
What is the equilibrium price in a market?
The price at which quantity supplied equals quantity demanded.
ExplanationBalanced market state where supply meets demand.
#3
What is the income effect in economics?
The change in quantity demanded due to a change in income.
ExplanationImpact of income changes on consumer demand.
#4
What does the price elasticity of demand measure?
The percentage change in quantity demanded in response to a one percent change in price.
ExplanationSensitivity of demand to price fluctuations.
#5
In economics, what is the law of supply?
As the price of a good or service decreases, the quantity supplied increases.
ExplanationPositive correlation between price and quantity supplied.
#6
If there is an increase in the price of a substitute good, what will likely happen in the market?
Demand for the original good will decrease.
ExplanationSubstitute goods impact each other's demand.
#7
Which of the following is a determinant of supply?
Technology used in production
ExplanationTechnological advancements affect supply.
#8
What does elasticity of demand measure?
The responsiveness of quantity demanded to a change in price.
ExplanationDegree of consumer response to price changes.
#9
Which of the following is an example of a price floor?
Minimum wage
ExplanationLegally set minimum price to prevent wages from falling below.
#10
What happens to the equilibrium price and quantity when both demand and supply increase?
Equilibrium price and quantity both increase.
ExplanationDual increase in demand and supply affects equilibrium.
#11
Which of the following scenarios is likely to lead to a perfectly elastic demand?
Electricity in the long run
ExplanationGoods with perfect substitutes have perfectly elastic demand.
#12
Which of the following is a characteristic of a monopolistic competition market structure?
Product differentiation among firms.
ExplanationDiverse product offerings among competitors.
#13
What is a perfectly inelastic demand curve?
A curve that is vertical.
ExplanationQuantity demanded remains constant regardless of price changes.
#14
Which of the following is a characteristic of a perfectly competitive market?
A large number of buyers and sellers
ExplanationHigh market competition with numerous participants.
#15
In a market with a price ceiling set below the equilibrium price, what is likely to occur?
A shortage of the good
ExplanationInsufficient supply to meet demand due to price restrictions.