Demand Skills Assessment

What are the factors that can affect demand for a product?

• Packaging, raw material costs, social media influence

• Price, consumer preferences, income levels, advertising, seasonality, availability of substitutes

• Brand popularity, weather conditions, government regulations

Explain the concept of price elasticity of demand.

• Price elasticity of demand is only applicable to luxury goods

• Price elasticity of demand is a concept that measures the responsiveness of the quantity demanded of a good to a change in its price.

• Price elasticity of demand is a measure of how much consumers like a product

• Price elasticity of demand does not change with price variations

How does a change in the price of a product affect the quantity demanded according to the law of demand?

• The quantity demanded increases when the price of a product increases and decreases when the price of a product decreases.

• The quantity demanded remains constant regardless of the price of a product.

• The quantity demanded increases when the price of a product decreases and decreases when the price of a product increases.

• The quantity demanded is not affected by the price of a product.

What is the difference between a movement along the demand curve and a shift in the demand curve?

• Movement along the demand curve is caused by a change in supply, while a shift is caused by a change in demand.

• Movement along the demand curve is due to a change in income, while a shift is due to a change in preferences.

• Movement along the demand curve is due to a change in price, while a shift in the demand curve is due to factors other than price.

• Movement along the demand curve is caused by a change in quantity, while a shift is caused by a change in quality.

If the price of a product increases and the quantity demanded decreases, what type of price elasticity of demand does the product have?

• Elastic

• Perfectly elastic

• Inelastic

• Unitary elastic

Give an example of a product with elastic demand.

• Luxury goods

• Necessities

• Generic medications

• Basic food items

What are some factors that can cause a shift in the demand curve?

• Changes in consumer income, prices of related goods, consumer preferences, population demographics, and expectations about future prices.

• Changes in government policies

• Weather conditions

• Global economic trends

Explain the concept of income elasticity of demand.

• Income elasticity of demand is a measure of how much the quantity demanded of a good changes in response to a change in consumer income.

• Income elasticity of demand is only applicable to luxury goods.

• Income elasticity of demand is a measure of how much the quantity supplied of a good changes in response to a change in consumer income.

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

If the demand for a product is inelastic, how will a change in price affect total revenue?

• Total revenue will remain constant regardless of price changes.

• Total revenue will increase when the price increases and decrease when the price decreases.

• Total revenue will decrease when the price increases and increase when the price decreases.

• Total revenue will only increase if the price decreases.

How does the law of demand relate to the downward slope of the demand curve?

• The law of demand has no impact on the demand curve slope

• The law of demand explains the downward slope of the demand curve by showing how consumers react to changes in price.

• The demand curve slope is determined by supply, not demand

• The downward slope of the demand curve is due to consumer preferences