#1
In the context of supply and demand, what does the law of demand state?
As price increases, quantity demanded decreases
ExplanationHigher prices lead to lower demand.
#2
What is the law of supply in market dynamics?
As price increases, quantity supplied increases
ExplanationSuppliers produce more as prices rise.
#3
How does technological advancement typically impact the supply curve?
Shifts the supply curve to the right
ExplanationMore efficient production leads to increased supply.
#4
What is the impact of a subsidy on the supply curve?
Shifts the supply curve to the right
ExplanationSubsidies incentivize more production, increasing supply.
#5
Which factor does NOT typically influence demand in the market?
Cost of production
ExplanationProduction costs usually affect supply, not demand.
#6
What is the elasticity of demand?
A measure of how much quantity demanded responds to a change in price
ExplanationIt quantifies consumer responsiveness to price changes.
#7
What is the difference between a movement along the demand curve and a shift of the demand curve?
A movement is caused by a change in price, while a shift is caused by a change in non-price factors
ExplanationMovements show changes in price, shifts show changes in other factors.
#8
If the government imposes a price floor above the equilibrium price, what is likely to happen?
A surplus will occur
ExplanationMore goods will be supplied than demanded.
#9
What is the difference between a normal good and an inferior good?
Normal goods experience an increase in demand with rising incomes, while inferior goods experience a decrease in demand
ExplanationNormal goods are demanded more as incomes rise, unlike inferior goods.
#10
If the price of a complementary good increases, what is likely to happen to the demand for the main product?
The demand will decrease
ExplanationHigher prices of complements reduce demand for main products.
#11
If the demand for a product is inelastic, how will a change in price affect total revenue?
Total revenue will remain unchanged
ExplanationInelastic demand means price changes don't significantly affect revenue.
#12
What is the concept of equilibrium price in supply and demand analysis?
The price at which quantity demanded equals quantity supplied
ExplanationIt's the balance point where demand matches supply.
#13
What is the cross elasticity of demand?
A measure of how quantity demanded of one good responds to a change in price of another good
ExplanationIt shows how products' demand reacts to each other's price changes.
#14
If the demand curve is perfectly elastic, how does a change in price affect quantity demanded?
Quantity demanded remains constant regardless of price changes
ExplanationConsumers buy the same quantity regardless of price.
#15
What is the concept of elasticity of supply?
A measure of how much quantity supplied responds to a change in price
ExplanationIt gauges producers' responsiveness to price fluctuations.
#16
What is the concept of deadweight loss in the context of market dynamics?
The total loss in economic efficiency due to a market intervention
ExplanationIt quantifies efficiency loss from market distortions.