Economics Quiz

What are the two main components of demand according to the provided material?

• Willingness and ability

• Price and quantity

• Supply and demand

• Cost and benefit

What does 'willingness' mean in the context of demand?

• Buyers must have the financial resources to afford the item

• Buyers must want the item

• Buyers must be able to sell the item

• Buyers must have a numerical amount

What does 'ability' mean in the context of demand?

• Buyers must want the item

• Buyers must have the financial resources to afford the item

• Buyers must be able to sell the item

• Buyers must have a numerical amount

What does the Law of Demand state about the relationship between the price of an item and the quantity demanded?

• The price of an item does not affect the quantity demanded.

• The price of an item is directly related to the quantity demanded.

• The price of an item is inversely related to the quantity demanded.

• The price of an item is unrelated to the quantity demanded.

According to the Law of Demand, what happens to the quantity demanded when the price of goods/services decreases?

• The quantity demanded decreases.

• The quantity demanded increases.

• The quantity demanded remains the same.

• The quantity demanded fluctuates randomly.

What is the effect on the quantity demanded when the price of goods/services increases, according to the Law of Demand?

• The quantity demanded increases.

• The quantity demanded decreases.

• The quantity demanded remains the same.

• The quantity demanded fluctuates randomly.

Which of the following statements is true according to the Law of Demand?

• When goods/services are cheap, people tend to buy less.

• When goods/services are expensive, people tend to buy more.

• When goods/services are cheap, people tend to buy more.

• The price of goods/services does not affect buying behavior.

Which of the following best describes the Income Effect?

• When things are expensive, money buys less

• When apples are expensive, I buy fewer apples

• Each additional unit of an item purchased gives more utility

• When things are cheap, money buys less

What happens according to the Substitution Effect when apples are expensive?

• I buy more apples

• I buy fewer apples and more pears

• I buy fewer pears and more apples

• I buy the same amount of apples and pears

What does the Diminishing Marginal Utility state about each additional unit of an item purchased?

• It gives more marginal utility than the previous unit

• It gives the same marginal utility as the previous unit

• It gives less marginal utility than the previous unit

• It gives no marginal utility