jwoga DOL Economics Sup/Demand

What is diminishing marginal utility?

• The economic concept that states as a person consumes more units of a product, the additional satisfaction or utility from each additional unit increases.

• The economic concept that states as a person consumes more units of a product, the additional satisfaction or utility from each additional unit decreases.

• The economic concept that states as a person consumes more units of a product, the additional satisfaction or utility from each additional unit is unpredictable.

• The economic concept that states as a person consumes more units of a product, the additional satisfaction or utility from each additional unit remains constant.

Explain the law of demand with an example.

• When the price of a chocolate bar increases, people tend to buy fewer chocolate bars because they become more expensive.

• When the price of a chocolate bar increases, people tend to buy the same amount of chocolate bars because they are used to the price.

• When the price of a chocolate bar increases, people tend to buy more chocolate bars because they become more valuable.

• When the price of a chocolate bar increases, people tend to buy more chocolate bars because they want to support the chocolate industry.

Define the law of supply and provide an example.

• The law of supply only applies to services, not products

• As the price of a product increases, the quantity supplied decreases

• As the price of a product increases, the quantity supplied by producers also increases, and as the price decreases, the quantity supplied decreases.

• Producers have no influence on the quantity supplied

How does price elasticity of demand affect consumer behavior?

• Price elasticity of demand has no impact on consumer behavior

• Consumer behavior is only influenced by advertising, not price elasticity of demand

• Price elasticity of demand affects consumer behavior by influencing how much consumers will buy in response to a change in price.

• Price elasticity of demand only affects the supply side of the market, not consumer behavior

What are the determinants of price elasticity of demand?

• Color of the product, brand popularity, packaging

• Availability of substitutes, necessity or luxury, proportion of income spent, and time period

• Customer's age, employee salaries, government regulations

• Weather conditions, advertising budget, company's profit margin

Discuss the relationship between price and quantity supplied.

• Constant

• Negative

• Positive

• No relationship