#1
Which of the following factors does NOT influence demand?
Cost of production
ExplanationCost of production is a determinant of supply, not demand.
#2
If there is a surplus in the market, what is most likely to happen to prices?
Prices will fall
ExplanationSurplus increases supply, leading to price decreases.
#3
What is the law of demand?
As the price of a good increases, the quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#4
Which of the following is an example of a substitute good?
Tea and coffee
ExplanationGoods that can be used interchangeably.
#5
What is the law of supply?
As the price of a good increases, the quantity supplied increases
ExplanationDirect relationship between price and quantity supplied.
#6
Which of the following is NOT a determinant of supply?
Price of the product
ExplanationPrice of the product affects quantity supplied.
#7
Which of the following is a determinant of supply?
Technology
ExplanationTechnological advancements affect production capacity.
#8
What is the price elasticity of demand formula?
Percentage change in price divided by percentage change in quantity demanded
ExplanationIt measures responsiveness of quantity demanded to price changes.
#9
What does a perfectly elastic demand curve look like?
Horizontal line
ExplanationConsumers are extremely responsive to price changes.
#10
What is the main factor affecting the price elasticity of demand?
The availability of substitutes
ExplanationSubstitutes influence consumers' responsiveness to price changes.
#11
What is the equilibrium price in a market?
The price at which quantity demanded equals quantity supplied
ExplanationBalanced point where supply meets demand.
#12
Which of the following would likely cause a shift in the supply curve?
Change in technology
ExplanationTechnological advancements alter production capabilities.
#13
What happens to equilibrium price and quantity if both supply and demand increase?
Price and quantity both increase
ExplanationIncreased supply meets increased demand, leading to higher price and quantity.
#14
What is the relationship between price elasticity of demand and total revenue?
They move in opposite directions
ExplanationAs price elasticity increases, total revenue decreases (and vice versa).
#15
What is the difference between a movement along the demand curve and a shift in the demand curve?
A movement along the curve represents a change in quantity demanded, while a shift represents a change in price
ExplanationMovement: Change in quantity demanded at same price; Shift: Change in demand due to non-price factors.
#16
What happens to equilibrium price and quantity if supply decreases and demand increases?
Price increases, quantity decreases
ExplanationIncreased demand and decreased supply lead to higher prices and lower quantities.
#17
What is the impact on equilibrium price and quantity if both demand and supply decrease?
Price and quantity both decrease
ExplanationDecreased demand and supply lead to lower prices and quantities.