#1
Which of the following causes a movement along the demand curve?
Change in the price of the good itself
ExplanationMovement along demand curve is caused by changes in price, not shifts in demand.
#2
What does the term 'market equilibrium' refer to?
A situation where quantity demanded equals quantity supplied
ExplanationEquilibrium is where demand matches supply, preventing shortages or surpluses.
#3
Which factor does NOT affect demand?
Cost of production
ExplanationCost of production influences supply, not demand.
#4
What is the relationship between price and quantity supplied, according to the law of supply?
Direct relationship
ExplanationThe law of supply dictates that as price rises, the quantity supplied increases.
#5
What does a downward-sloping demand curve imply?
Consumers demand more as the price decreases
ExplanationThe negative slope indicates that as prices decrease, demand increases.
#6
What does the term 'market demand' refer to?
The total amount of a good or service that all consumers are willing and able to purchase at a given price
ExplanationMarket demand represents the aggregate quantity of a good or service demanded by all consumers.
#7
What is the law of demand?
As the price of a good decreases, the quantity demanded increases
ExplanationThe inverse relationship between price and quantity demanded is captured by the law of demand.
#8
What happens to the equilibrium price and quantity when demand increases and supply decreases?
Price increases, quantity decreases
ExplanationDemand increase and supply decrease lead to higher prices and lower quantities at equilibrium.
#9
In economics, what does 'elasticity' measure?
The responsiveness of quantity demanded to a change in price
ExplanationElasticity measures how quantity demanded changes in response to price fluctuations.
#10
What is a 'price ceiling' in a market?
A maximum price set by the government to prevent prices from rising above a certain level
ExplanationPrice ceilings are government-imposed maximum prices to control costs.
#11
What is the relationship between price elasticity of demand and total revenue?
They move in opposite directions
ExplanationWhen demand is elastic, price and revenue move inversely; when inelastic, they move together.
#12
Which of the following is NOT a determinant of supply?
Consumer income
ExplanationConsumer income affects demand, not supply.
#13
What does the term 'price elasticity of supply' measure?
The responsiveness of quantity supplied to a change in price
ExplanationPrice elasticity of supply assesses how quantity supplied changes in response to price shifts.
#14
Which of the following would likely lead to an increase in demand for a normal good?
An increase in consumer income
ExplanationNormal goods experience higher demand as consumer income rises.
#15
What is the 'law of supply' in economics?
As the price of a good decreases, the quantity supplied increases
ExplanationLaw of supply states that higher prices lead to increased quantity supplied.
#16
What is the 'cross-price elasticity of demand'?
The responsiveness of quantity demanded of one good to a change in the price of another good
ExplanationCross-price elasticity measures how demand for one good changes in response to a price change in another.
#17
What is the main effect of a subsidy on a market?
Decrease in equilibrium price, increase in equilibrium quantity
ExplanationSubsidies lower prices for consumers while increasing the quantity supplied.
#18
What is the difference between a change in demand and a change in quantity demanded?
A change in demand affects the entire demand curve, while a change in quantity demanded involves movement along the demand curve
ExplanationChanges in demand shift the curve, while quantity demanded changes involve movements along the curve.
#19
What is a 'normal good'?
A good for which demand increases as income increases
ExplanationNormal goods experience rising demand with increasing income levels.