HTF661-Economic Principles and Demand Forecasting Quiz

What is the law of demand?

• The law of demand states that the quantity demanded for a good or service remains constant regardless of price changes

• The law of demand only applies to luxury goods, not essential items

• As the price of a good or service increases, the quantity demanded for that good or service increases

• As the price of a good or service increases, the quantity demanded for that good or service decreases, and vice versa.

Define market equilibrium and explain its significance.

• Market equilibrium is the state where the supply of a good or service matches the demand for it, resulting in stable prices and quantities exchanged.

• Market equilibrium is when the government controls the prices of goods and services

• Market equilibrium is when the demand for a good exceeds the supply, leading to high prices

• Market equilibrium is when the supply of a good exceeds the demand, leading to low prices

Calculate the price elasticity of demand when the price increases by 10% and the quantity demanded decreases by 20%.

• 5

• -2

• 1.5

• 0.5

What are the different methods used for demand forecasting?

• Time series analysis, market research, expert opinion, and Delphi method

• Guessing randomly

• Asking friends and family

• Reading tea leaves

What factors can cause a shift in the demand curve?

• Changes in the weather

• Political stability

• Number of producers in the market

• Changes in income, prices of related goods, consumer preferences, and expectations

Explain the concept of income elasticity of demand.

• Income elasticity of demand measures the change in consumer preferences for a good in response to income change.

• Income elasticity of demand measures the quantity supplied for a good in response to income change.

• Income elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in income.

• Income elasticity of demand measures the price change of a good in response to income change.

Discuss the concept of cross-price elasticity of demand with an example.

• If the cross-price elasticity of demand is positive, it indicates that the two goods are substitutes. If it is negative, it indicates that the two goods are complements.

• If the cross-price elasticity of demand is positive, it indicates that the two goods are complements.

• If the cross-price elasticity of demand is positive, it indicates that the two goods are unrelated.

• If the cross-price elasticity of demand is negative, it indicates that the two goods are substitutes.

How does the concept of elasticity of supply differ from the concept of elasticity of demand?

• Elasticity of supply measures the responsiveness of quantity supplied to a change in price, while elasticity of demand measures the responsiveness of quantity demanded to a change in price.

• Elasticity of supply measures the responsiveness of quantity demanded to a change in price, while elasticity of demand measures the responsiveness of quantity supplied to a change in price.

• Elasticity of supply and elasticity of demand are the same concept and can be used interchangeably.

• Elasticity of supply measures the responsiveness of quantity supplied to a change in demand, while elasticity of demand measures the responsiveness of quantity demanded to a change in supply.

What are the limitations of demand forecasting?

• No external influences

• Inaccuracy

• Unlimited data availability

• Limitations of demand forecasting include accuracy, data availability, and external influences.

When the supply of a product or service goes up and the demand stays the same the Price will typically do what? 

• rise
• fall
• stay the same
• Consumer