#1
What does the law of demand state?
As price increases, quantity demanded increases
As price increases, quantity demanded decreases
As price decreases, quantity demanded increases
As price decreases, quantity demanded decreases
#2
What is the law of supply?
As price increases, quantity supplied increases
As price increases, quantity supplied decreases
As price decreases, quantity supplied increases
As price decreases, quantity supplied decreases
#3
What is a price ceiling?
A legal minimum price below which a good or service cannot be sold
A legal maximum price above which a good or service cannot be sold
A government subsidy given to producers to encourage production
A government subsidy given to consumers to encourage consumption
#4
What is the cross-price elasticity of demand?
The measure of responsiveness of quantity demanded to a change in income
The measure of responsiveness of quantity demanded to a change in price of a related good
The measure of responsiveness of quantity demanded to a change in price
The measure of responsiveness of quantity supplied to a change in price
#5
What is the concept of elasticity of substitution?
The measure of how easily factors of production can be substituted for each other
The measure of how easily consumers can substitute one good for another
The measure of how easily producers can substitute one input for another
The measure of how easily consumers can substitute income for goods
#6
Which of the following factors can cause a shift in the demand curve?
Changes in consumer income
Changes in the price of substitutes
Changes in consumer tastes and preferences
All of the above
#7
What is elasticity of demand?
The measure of responsiveness of quantity demanded to a change in price
The measure of responsiveness of quantity supplied to a change in price
The measure of responsiveness of price to a change in quantity demanded
The measure of responsiveness of price to a change in quantity supplied
#8
Which of the following factors can cause a shift in the supply curve?
Changes in input prices
Changes in technology
Changes in government regulations
All of the above
#9
What is the concept of market equilibrium?
When quantity supplied exceeds quantity demanded
When quantity demanded exceeds quantity supplied
When quantity supplied equals quantity demanded
When quantity demanded and supplied are unrelated
#10
What is a determinant of price elasticity of demand?
Income level
Time period
Price of related goods
All of the above
#11
What is consumer surplus?
The difference between the maximum price consumers are willing to pay and the market price
The difference between the market price and the cost of production
The difference between the quantity demanded and the quantity supplied
The difference between the minimum price producers are willing to accept and the market price
#12
What does a perfectly elastic supply curve look like?
Vertical
Horizontal
Upward sloping
Downward sloping
#13
What is the concept of price floor?
A legal minimum price below which a good or service cannot be sold
A legal maximum price above which a good or service cannot be sold
A government subsidy given to producers to encourage production
A government subsidy given to consumers to encourage consumption
#14
What is the income elasticity of demand for a normal good?
Positive
Negative
Zero
Infinity
#15
What is the price elasticity of demand for a necessity?
Elastic
Inelastic
Unit elastic
Perfectly elastic
#16
What happens to equilibrium price and quantity if there is an increase in both demand and supply?
Price increases, quantity increases
Price decreases, quantity increases
Price decreases, quantity decreases
Price increases, quantity decreases
#17
What is the difference between a movement along the demand curve and a shift in the demand curve?
A movement along the demand curve is caused by changes in price, while a shift is caused by factors other than price
A movement along the demand curve is caused by factors other than price, while a shift is caused by changes in price
Both a movement along the demand curve and a shift are caused by changes in price
Both a movement along the demand curve and a shift are caused by factors other than price
#18
What is price elasticity of supply?
The measure of responsiveness of quantity supplied to a change in price
The measure of responsiveness of quantity demanded to a change in price
The measure of responsiveness of price to a change in quantity supplied
The measure of responsiveness of price to a change in quantity demanded
#19
What factors can affect the elasticity of supply?
Availability of substitutes
Time period under consideration
Degree of perishability of the product
All of the above
#20
What is producer surplus?
The difference between the maximum price consumers are willing to pay and the market price
The difference between the market price and the cost of production
The difference between the quantity demanded and the quantity supplied
The difference between the minimum price producers are willing to accept and the market price
#21
What is the deadweight loss?
The loss in consumer surplus due to a decrease in demand
The loss in producer surplus due to an increase in supply
The total loss in consumer and producer surplus due to a market inefficiency
The loss in government revenue due to a decrease in taxes
#22
What is the difference between consumer surplus and producer surplus?
Consumer surplus is the difference between what consumers are willing to pay and what they actually pay, while producer surplus is the difference between what producers are willing to accept and what they actually receive
Consumer surplus is the difference between what consumers are willing to accept and what they actually receive, while producer surplus is the difference between what producers are willing to pay and what they actually pay
Consumer surplus is the difference between the maximum price consumers are willing to pay and the market price, while producer surplus is the difference between the market price and the cost of production
Consumer surplus is the difference between the market price and the cost of production, while producer surplus is the difference between the maximum price consumers are willing to pay and the market price
#23
What is the effect of a tax on a market with perfectly elastic supply?
The tax burden falls entirely on consumers
The tax burden falls entirely on producers
There is no effect on the market equilibrium
The tax burden is shared equally between consumers and producers
#24
What is the concept of utility?
The measure of total satisfaction or pleasure derived from consuming a good or service
The measure of total cost of producing a good or service
The measure of total profit earned from selling a good or service
The measure of total revenue generated from selling a good or service
#25
What happens to equilibrium price and quantity if both demand and supply decrease?
Price decreases, quantity increases
Price increases, quantity decreases
Price increases, quantity remains the same
Price and quantity both decrease