Economics Quiz

Discuss the impact of a natural disaster on supply and demand.

• It increases both supply and demand equally.

• It has no impact on supply and demand.

• It decreases supply and increases demand, leading to higher prices.

• It increases supply and decreases demand, leading to lower prices.

Explain how a surplus occurs in the market.

• When demand exceeds supply and prices are high.

• When supply exceeds demand and prices are low.

• When supply and demand are equal.

• When the government sets prices too high.

What happens when there is a shortage of a product in the market?

• Prices tend to decrease.

• Supply exceeds demand.

• Prices tend to increase.

• The market is in equilibrium.

How do government regulations affect supply and demand?

• They have no effect on supply and demand.

• They only affect the supply curve.

• They only affect the demand curve.

• They can limit supply, increase demand, or set prices, affecting the market equilibrium.

Describe a situation where the government may intervene to control prices.

• When there is a surplus of luxury goods.

• When there is a natural disaster causing a shortage of essential goods.

• When the market is in perfect competition.

• When businesses request lower taxes.

How does advertising influence consumer demand for a product?

• It decreases the demand for a product.

• It has no effect on the demand for a product.

• It increases the demand for a product by informing and persuading consumers.

• It only affects the supply of a product.

Explain the concept of elasticity of demand.

• It is the measure of how supply reacts to a change in price.

• It is the measure of how demand reacts to a change in the quality of a product.

• It is the measure of how demand reacts to a change in price.

• It is the measure of how demand reacts to a change in advertising.

Provide an example of an elastic and inelastic product.

• Elastic: luxury car, Inelastic: insulin

• Elastic: water, Inelastic: salt

• Elastic: bread, Inelastic: diamonds

• Elastic: electricity, Inelastic: smartphones

Discuss how changes in income levels can affect demand.

• Demand is not affected by changes in income levels.

• Higher income levels decrease demand for all goods.

• Lower income levels increase demand for all goods.

• Higher income levels can increase demand for normal goods and decrease demand for inferior goods.

Why is it important for businesses to understand and respond to changes in supply and demand?

• To avoid paying taxes.

• To maintain a constant price regardless of market conditions.

• To ensure they can meet consumer needs and maximize profits.

• To focus solely on production efficiency.