IB DP Economics: Demand and Supply Quiz

What effect occurs when the price of a good decreases, making it more attractive compared to substitutes?

• Substitution effect

• Marginal utility effect

• Total utility effect

• Income effect

What does the law of diminishing marginal utility state?

• Utility can be measured in utils.

• Utility increases with every additional unit consumed.

• Marginal utility remains constant.

• Total utility decreases with more consumption.

What is the definition of marginal cost?

• Cost of producing one more unit of a product

• Total cost incurred by a firm

• Cost that does not change with output

• Cost that changes with output

What happens to marginal product when more units of a variable input are added?

• It remains constant.

• It eventually decreases after a certain point.

• It becomes negative.

• It always increases.

What is the relationship between marginal product and marginal cost?

• When marginal product increases, marginal cost decreases.

• When marginal product falls, marginal cost decreases.

• When marginal product is maximum, marginal cost is maximum.

• When marginal product increases, marginal cost increases.

What is the term for the satisfaction gained from consuming a good?

• Utility

• Substitution

• Marginal cost

• Total cost

What does the law of diminishing marginal returns apply to?

• Both fixed and variable inputs

• Variable inputs only

• None of the above

• Fixed inputs only

What is the definition of total product?

• Total number of inputs used

• Total cost incurred by a firm

• Total quantity of output produced by the firm

• Total satisfaction from consuming all goods

What is a fixed cost?

• Cost that changes with output

• Cost that does not change when output changes

• Cost that varies with production levels

• Cost that is always zero

What happens to the income effect when the price of a good decreases?

• Consumers' real income decreases.

• Consumers' purchasing power decreases.

• Consumers buy more goods with the same budget.

• Consumers buy less of the good.