#1
Which of the following scenarios would likely result in an increase in demand for a product?
An increase in consumer preferences for the product
ExplanationHigher consumer preferences typically lead to increased demand.
#2
Which of the following is a determinant of supply?
Technology
ExplanationTechnological advancements influence supply levels.
#3
What is the concept of price elasticity of demand?
It measures the responsiveness of quantity demanded to changes in price
ExplanationPrice elasticity of demand assesses how demand changes with variations in price.
#4
Which of the following is an example of a substitute good?
Gasoline and hybrid cars
ExplanationSubstitute goods can be replaced with each other, like gasoline and hybrid cars.
#5
What is the law of demand?
As price increases, quantity demanded decreases
ExplanationThe law of demand states that higher prices lead to lower quantities demanded.
#6
What happens to equilibrium price and quantity if both demand and supply increase?
Price and quantity both increase
ExplanationSimultaneous increases in demand and supply cause a rise in both equilibrium price and quantity.
#7
If the price of a good increases, what will happen to the quantity supplied?
It will increase
ExplanationHigher prices generally lead to an increase in the quantity supplied.
#8
If the government imposes a price floor above the equilibrium price, what is likely to happen in the market?
Excess supply
ExplanationA price floor above equilibrium leads to surplus supply in the market.
#9
Which of the following is likely to cause a shift in the demand curve?
Change in consumer income
ExplanationShifts in consumer income can alter overall demand levels.
#10
What happens to equilibrium price and quantity if there is a decrease in both demand and supply?
Price and quantity both decrease
ExplanationSimultaneous decreases in demand and supply result in a decline in both equilibrium price and quantity.
#11
What is the relationship between elasticity of demand and total revenue?
They are inversely related
ExplanationAs demand elasticity increases, total revenue tends to decrease.
#12
What is the difference between a change in quantity supplied and a change in supply?
Change in quantity supplied is caused by price change; change in supply is caused by non-price factors
ExplanationQuantity supplied changes due to price, while supply changes due to non-price factors.
#13
If a good has a perfectly elastic demand curve, what does this imply about the price elasticity coefficient?
It is equal to infinity
ExplanationPerfectly elastic demand indicates an infinite price elasticity coefficient.
#14
If the supply of a good is perfectly inelastic, how will a change in price affect quantity supplied?
Quantity supplied remains the same
ExplanationPerfectly inelastic supply means quantity supplied does not change with variations in price.
#15
What is the effect of an increase in supply and a decrease in demand on equilibrium quantity?
Equilibrium quantity increases
ExplanationAn increase in supply and a decrease in demand result in a higher equilibrium quantity.