Fundamentals of Economics

What is the law of demand?

• The law of demand suggests that demand remains constant regardless of price changes.

• The law of demand indicates that higher prices lead to higher quantity demanded.

• The law of demand states that price and quantity demanded are inversely related.

• The law of demand states that price and quantity demanded are directly related.

How does supply affect market prices?

• Higher supply always leads to higher prices regardless of demand.

• Supply has no effect on market prices at all.

• Supply inversely affects market prices; increased supply lowers prices, while decreased supply raises prices.

• Increased supply raises prices, while decreased supply lowers prices.

What are the four types of market structures?

• Perfect Competition, Monopolistic Competition, Oligopoly, Monopoly

• Duopoly

• Competitive Oligopoly

• Perfect Monopoly

What is a monopoly?

• A monopoly is a market structure with multiple sellers competing.

• A monopoly is a type of government regulation on prices.

• A monopoly is when a product is sold at a discount by various retailers.

• A monopoly is a market structure with a single seller dominating the market.

Define scarcity in economics.

• Scarcity is the economic principle of unlimited resources.

• Scarcity refers to the abundance of resources available to meet needs.

• Scarcity is the situation where all wants and needs are fully satisfied.

• Scarcity is the condition where resources are limited in relation to the wants and needs of individuals.

What is the role of choice in economics?

• Choice has no impact on resource distribution.

• Choice is irrelevant to consumer behavior.

• Choice is fundamental in economics as it drives resource allocation and decision-making.

• Choice is only relevant in political science.

What does opportunity cost mean?

• Opportunity cost is the benefit received from the best alternative chosen.

• Opportunity cost is the value of the next best alternative that is given up when making a choice.

• Opportunity cost refers to the time taken to make a decision.

• Opportunity cost is the total cost of all alternatives combined.

How can opportunity cost affect decision-making?

• Opportunity cost is irrelevant in personal choices.

• Opportunity cost influences decision-making by making individuals consider the value of alternatives they are giving up.

• Opportunity cost guarantees better outcomes in every decision.

• Opportunity cost only applies to financial decisions.

What is inflation?

• Inflation is the process of reducing the money supply to stabilize prices.

• Inflation is the increase in prices and fall in the purchasing value of money.

• Inflation refers to the total amount of money in circulation without any price changes.

• Inflation is the decrease in prices and increase in the purchasing value of money.

What causes deflation?

• Deflation is caused by a decrease in money supply, reduced consumer demand, or increased productivity.

• A rise in consumer confidence

• Higher interest rates

• Increased government spending