Microeconomics Quiz (Ch1-4)

What is the law of demand?

• The law of demand states that as price increases, quantity demanded also increases.

• The law of demand is the inverse relationship between price and quantity demanded.

• The law of demand states that price and quantity demanded are unrelated.

• The law of demand states that price and quantity demanded have a direct relationship.

Define supply and explain the factors that can affect it.

• Supply refers to the quantity of a product or service that is available for purchase in the market. Factors that can affect supply include the cost of production, technology, government regulations, natural disasters, and changes in the price of inputs.

• Supply refers to the quantity of a product or service that is available for purchase in the market. Factors that can affect supply include changes in consumer tastes, fashion trends, and social media influence.

• Supply refers to the quantity of a product or service that is available for purchase in the market. Factors that can affect supply include changes in consumer income, population growth, and inflation.

• Supply refers to the quantity of a product or service that is demanded in the market. Factors that can affect supply include consumer preferences, advertising, and brand reputation.

What is the difference between a change in quantity demanded and a change in demand?

• A change in quantity demanded refers to a shift of the entire demand curve due to factors other than price, while a change in demand refers to a movement along the demand curve due to a change in price.

• A change in quantity demanded refers to a movement along the demand curve due to a change in price, while a change in demand refers to a shift of the entire demand curve due to factors other than price.

• A change in quantity demanded and a change in demand are the same thing.

• A change in quantity demanded refers to a shift of the entire demand curve due to a change in price, while a change in demand refers to a movement along the supply curve due to factors other than price.

What is price elasticity of demand.

What are the determinants of price elasticity of demand?

• availability of substitutes, necessity or luxury, proportion of income spent, time period, and definition of the market

• weather conditions, political stability, exchange rates, and consumer expectations

• cost of production, level of competition, consumer demographics, and technological advancements

• price of the product, consumer income, consumer tastes and preferences, advertising and promotion, and government regulations

Define market equilibrium and explain how it is determined.

• Market equilibrium is the point at which the quantity demanded by consumers equals the quantity supplied by producers. It is determined by the intersection of the demand and supply curves in a market.

• Market equilibrium is the point at which the quantity demanded by consumers is determined solely by the producers.

• Market equilibrium is the point at which the quantity demanded by consumers is unrelated to the quantity supplied by producers.

• Market equilibrium is the point at which the quantity demanded by consumers exceeds the quantity supplied by producers.

What happens to market equilibrium when there is an increase in demand?

• The market equilibrium shifts to a higher quantity and higher price.

• The market equilibrium shifts to a higher quantity and lower price.

• The market equilibrium remains unchanged.

• The market equilibrium shifts to a lower quantity and lower price.

What happens to market equilibrium when there is a decrease in supply?

• The market equilibrium will shift with a lower price and lower quantity.

• The market equilibrium will shift with a lower price and higher quantity.

• The market equilibrium will shift with a higher price and lower quantity.

• The market equilibrium will remain unchanged.

Explain the concept of price elasticity of supply.

• Price elasticity of supply is a measure of the responsiveness of the quantity supplied of a good or service to a change in production costs.

• Price elasticity of supply is a measure of the responsiveness of the quantity supplied of a good or service to a change in its price.

• Price elasticity of supply is a measure of the responsiveness of the quantity supplied of a good or service to a change in income.

• Price elasticity of supply is a measure of the responsiveness of the quantity supplied of a good or service to a change in demand.

What factors can affect the elasticity of supply?

• Population growth, inflation rate, interest rates

• Weather conditions, transportation costs, exchange rates

• Demand, consumer preferences, market competition

• Production costs, availability of resources, technology, time period, and government regulations.