#1
Which of the following best describes the law of demand?
As the price of a good increases, the quantity demanded decreases.
As the price of a good decreases, the quantity demanded increases.
As the price of a good increases, the quantity demanded increases.
As the price of a good decreases, the quantity demanded decreases.
#2
What does the supply curve illustrate?
The relationship between price and quantity demanded.
The relationship between price and quantity supplied.
The relationship between price and consumer income.
The relationship between price and consumer preferences.
#3
What happens to equilibrium price and quantity when demand increases and supply decreases?
Equilibrium price decreases, equilibrium quantity decreases.
Equilibrium price increases, equilibrium quantity increases.
Equilibrium price increases, equilibrium quantity decreases.
Equilibrium price decreases, equilibrium quantity increases.
#4
Which of the following factors does NOT cause a shift in the demand curve?
Change in consumer income.
Change in the price of substitutes.
Change in consumer tastes and preferences.
Change in the price of the good itself.
#5
What does the term 'price elasticity of demand' measure?
The percentage change in quantity demanded for a percentage change in price.
The percentage change in price for a percentage change in quantity demanded.
The percentage change in quantity demanded for a percentage change in income.
The percentage change in price for a percentage change in income.
#6
If the cross-price elasticity of demand between two goods is negative, what does it indicate?
The goods are substitutes.
The goods are complements.
There is no relationship between the goods.
The goods are inferior.
#7
What does the income elasticity of demand measure?
The percentage change in quantity demanded for a percentage change in income.
The percentage change in income for a percentage change in quantity demanded.
The percentage change in price for a percentage change in income.
The percentage change in quantity demanded for a percentage change in price.
#8
Which of the following situations would lead to an increase in the price of a good?
An increase in production costs.
A decrease in demand.
A decrease in taxes on the good.
An increase in subsidies for the good.
#9
What is the effect of a price ceiling below the equilibrium price?
There is no effect on the market.
It creates excess demand.
It creates excess supply.
It shifts the supply curve to the left.
#10
What is the concept of consumer surplus?
The difference between the price a consumer is willing to pay and the price they actually pay.
The difference between the quantity demanded and the quantity supplied at the equilibrium price.
The difference between the price a consumer is willing to pay and the cost of producing the good.
The difference between the price a consumer pays and the price the producer receives.
#11
What is the effect of a subsidy on producers?
Increase in costs of production
Decrease in costs of production
No effect on costs of production
Uncertain effect on costs of production
#12
What does the price elasticity of demand measure?
The responsiveness of quantity demanded to a change in price
The responsiveness of quantity supplied to a change in price
The responsiveness of quantity demanded to a change in income
The responsiveness of quantity supplied to a change in income
#13
What is the concept of elasticity of supply?
It measures the responsiveness of quantity demanded to a change in price.
It measures the responsiveness of quantity supplied to a change in price.
It measures the responsiveness of quantity demanded to a change in income.
It measures the responsiveness of quantity supplied to a change in income.
#14
What is the main determinant of the price elasticity of supply?
Time period considered.
Availability of resources.
Price level.
Producer surplus.
#15
What happens to equilibrium price and quantity if both demand and supply increase by the same proportion?
Equilibrium price increases, equilibrium quantity decreases.
Equilibrium price decreases, equilibrium quantity increases.
Equilibrium price decreases, equilibrium quantity remains the same.
Equilibrium price remains the same, equilibrium quantity increases.
#16
If a good has a perfectly inelastic demand, what is the price elasticity of demand?
Zero
Greater than 1
Less than 1
Infinity
#17
What does it mean when demand is said to be elastic?
Consumers are not very responsive to price changes.
Consumers are highly responsive to price changes.
Consumers do not respond to price changes at all.
Consumers respond to income changes more than price changes.
#18
What is the impact of a subsidy on equilibrium price and quantity?
Equilibrium price increases, equilibrium quantity increases.
Equilibrium price decreases, equilibrium quantity decreases.
Equilibrium price decreases, equilibrium quantity increases.
Equilibrium price increases, equilibrium quantity decreases.
#19
In the long run, what happens to the supply curve of a good if there is an increase in demand?
The supply curve shifts to the right.
The supply curve shifts to the left.
The supply curve becomes perfectly elastic.
The supply curve becomes perfectly inelastic.
#20
What is the slope of the demand curve when demand is perfectly inelastic?
Zero
Positive
Negative
Infinity
#21
What happens to equilibrium price and quantity when both demand and supply increase?
Equilibrium price increases, equilibrium quantity decreases.
Equilibrium price decreases, equilibrium quantity increases.
Equilibrium price and quantity both increase.
Equilibrium price and quantity both decrease.
#22
What is the effect of a technological advancement on supply?
It shifts the supply curve to the left.
It shifts the supply curve to the right.
It shifts the demand curve to the left.
It shifts the demand curve to the right.
#23
If the demand for a good is inelastic, how does a decrease in price affect total revenue?
Total revenue decreases
Total revenue increases
Total revenue remains constant
The effect on total revenue cannot be determined
#24
What is the impact of an increase in both demand and supply on equilibrium quantity?
Equilibrium quantity increases
Equilibrium quantity decreases
Equilibrium quantity remains constant
The effect on equilibrium quantity cannot be determined
#25
What does the price elasticity of supply measure?
The responsiveness of quantity supplied to a change in price
The responsiveness of quantity demanded to a change in price
The responsiveness of quantity supplied to a change in income
The responsiveness of quantity demanded to a change in income