Nov 2024 2

Which of the following best describes the law of demand?

• When income increases, the demand for goods increases.

• When the price of a good decreases, the demand for the good increases.

• When the price of a good decreases, the quantity demanded of the good decreases.

• When the price of a good increases, the quantity demanded of the good decreases.

• When the demand for a good increases, consumers' willingness and ability to buy the good increases.

Which of the following will cause the demand for a normal good to increase?

• A decrease in consumers' income

• A decrease in the price of a complementary good

• A decrease in the price of a substitute good

• A decrease in the price of the good

• A decrease in the number of consumers

Which of the following statements relating to supply is true?

• An increase in an input price will lead to an increase in supply.

• An increase in the price of a good will lead to an increase in the supply of the good.

• A decrease in consumers' income will lead to a decrease in the supply of the good.

• A decrease in the price of a good will lead to a decrease in the quantity supplied of the good.

• A decrease in the price of a substitute good in production will lead to a decrease in the supply of another substitute good.

Which of the following changes will lead to an increase in the supply of good X?

• An increase in the price of good X

• An increase in the wages of labor used to produce good X

• A decrease in the price of energy, a key input to the production of good X

• An increase in the demand for good X

• A decrease in the number of sellers of good X

Assume that the price of orange juice increases by 40 percent following a crop failure. If the quantity demanded falls by 10 percent, which of the following is true?

• The demand for orange juice is elastic.

• The price of grapefruit juice, a substitute good, will fall.

• The absolute value of the price elasticity of demand for orange juice is 4.

• The absolute value of the price elasticity of demand for orange juice is 0.25.

• The absolute value of the price elasticity of demand for orange juice is 10.

The price elasticity of demand for a product is 0.5. If the price of the product increases by 20 percent, which of the following will occur?

• The quantity demanded of the good will increase by 10%.

• The quantity demanded of the good will increase by 20%.

• The quantity demanded of the good will increase by 40%.

• The quantity demanded of the good will decrease by 10%.

• The quantity demanded of the good will decrease by 40%.

Which of the following statements about the price elasticity of demand is true?

• When demand is price inelastic, total revenue will decrease as price increases.

• When demand is price elastic, an increase in price will increase total revenue.

• Demand tends to be more elastic in the short run compared to the long run.

• As more close substitutes become available, demand tends to be more price elastic.

• As a good becomes viewed as a necessity, demand becomes more price elastic.

If the value of the price elasticity of supply is 3, which of the following is true?

• A 10 percent decrease in price will decrease the quantity supplied by 30 percent.

• A percentage increase in price will lead to a relatively smaller percentage increase in quantity supplied.

• The supply curve is downward sloping with respect to the price of output.

• Supply is inelastic.

• A 3 percent increase in price will decrease the quantity supplied by 10 percent.

Assume a 10 percent increase in price increased the market quantity supplied by 20 percent. Which of the following is true?

• The value of the price elasticity of supply is 2.

• The value of the price elasticity of supply is 0.5.

• Supply is price inelastic.

• Demand is price elastic.

• This price-quantity combination violates the law of supply.

Assume that the price elasticity of supply for good Y is 0.5. If the price of good Y decreases by 30 percent, the quantity supplied of good Y will

• decrease by 60 percent

• decrease by 30 percent

• decrease by 15 percent

• increase by 0.5 percent

• increase by 0.15 percent