#1
Which of the following best defines the law of demand?
As prices rise, quantity demanded falls.
ExplanationInverse relationship between price and quantity demanded.
#2
What is the law of supply?
As prices rise, quantity supplied rises.
ExplanationDirect relationship between price and quantity supplied.
#3
What is price elasticity of demand?
The percentage change in quantity demanded relative to a percentage change in price.
ExplanationSensitivity of demand to price changes.
#4
What is income elasticity of demand?
The responsiveness of quantity demanded to changes in income.
ExplanationSensitivity of demand to income changes.
#5
What causes a shift in the demand curve?
Change in income.
ExplanationChange in factors other than price.
#6
Which factor does NOT typically affect supply?
Consumer preferences
ExplanationPreference is a demand factor, not supply.
#7
What is the equilibrium price?
The price at which quantity demanded equals quantity supplied.
ExplanationPoint of market balance.
#8
What does a surplus indicate in the market?
Quantity supplied exceeds quantity demanded.
ExplanationExcess supply in the market.
#9
Which factor is most likely to cause a decrease in demand for a product?
An increase in the price of a complementary good.
ExplanationNegative impact on demand due to related goods.
#10
What does it mean when demand is said to be elastic?
A small change in price leads to a large change in quantity demanded.
ExplanationSensitive response to price changes.
#11
In the long run, how does an increase in demand affect equilibrium price and quantity?
Price increases, quantity increases.
ExplanationLong-term impact of increased demand.
#12
What is the income elasticity of demand?
The percentage change in quantity demanded relative to a percentage change in income.
ExplanationSensitivity of demand to income changes.
#13
What does it mean when supply is perfectly elastic?
Supply curve is horizontal.
ExplanationInfinitely responsive supply.
#14
What is the cross-price elasticity of demand between substitutes?
Negative
ExplanationInverse relationship between substitute goods.