#1
What is the law of demand in economics?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded
#2
In the context of supply and demand, what does the term 'elasticity' refer to?
The sensitivity of quantity demanded to a change in price
ExplanationExtent of responsiveness of quantity to price changes
#3
What is the cross-price elasticity of demand?
The responsiveness of quantity demanded to a change in the price of a related good
ExplanationExtent to which demand for one good changes due to a change in another good's price
#4
What is the concept of consumer surplus?
The difference between the price paid and the maximum price a consumer is willing to pay
ExplanationBenefit gained by consumers when paying less than their maximum willingness to pay
#5
What is the concept of price elasticity of demand?
The responsiveness of quantity demanded to a change in price
ExplanationDegree of responsiveness of demand to price changes
#6
Which of the following is a determinant of supply?
Technology
ExplanationInfluence on production capabilities affecting supply
#7
What is the market equilibrium?
The point where supply and demand intersect
ExplanationBalanced state where quantity supplied equals quantity demanded
#8
What is a perfectly elastic demand curve?
A horizontal demand curve
ExplanationDemand curve where any price change leads to infinite quantity change
#9
What is the primary function of a price floor in the market?
To set a minimum price for a good or service
ExplanationGovernment intervention to prevent prices from falling below a certain level
#10
What is the substitution effect in the context of price changes?
The change in quantity demanded due to a change in the price of a substitute good
ExplanationShift in consumer preference towards substitutes when prices change
#11
What is the concept of a Giffen good?
A good where quantity demanded increases as price increases
ExplanationUnusual case where higher prices lead to higher demand due to income effect
#12
What is the concept of elasticity of demand?
The responsiveness of quantity demanded to a change in price
ExplanationDegree of sensitivity of demand to price changes
#13
What is a price ceiling in the context of the market?
A legal maximum price set by the government
ExplanationGovernment-imposed cap on prices
#14
What is a determinant of demand?
Price of the good itself
ExplanationFactors affecting consumer willingness to purchase at different prices
#15
What happens to market equilibrium if both supply and demand increase?
Equilibrium price and quantity both increase
ExplanationSimultaneous shifts leading to higher price and quantity traded
#16
How does a subsidy affect the market equilibrium?
It decreases equilibrium price and increases equilibrium quantity
ExplanationGovernment aid reducing consumer cost and stimulating demand
#17
What is the concept of a price elasticity of supply?
The responsiveness of quantity supplied to a change in price
ExplanationDegree of sensitivity of supply to price changes