Chapter 4 - Quick Quiz

In what situation would you expect to see an increase in demand for a product?

• When the price of a substitute good decreases.
• When the product is considered a luxury item.
• When the product becomes more popular.
• When consumer income decreases.

What typically happens to prices when there is a surplus in the market?

• Prices tend to rise to encourage more supply.
• Prices are set by government regulation.
• Prices tend to fall to eliminate excess supply.
• Prices remain unchanged regardless of supply.

Which of the following best describes elasticity of demand?

• It indicates the total quantity of goods available in the market.
• It measures how sensitive the quantity demanded is to a change in price.
• It reflects consumer preferences for different goods.
• It measures how much supply changes with price.

If a small increase in the price of a product leads to a significant decrease in the quantity demanded, how is the demand for that product classified?

• Inelastic
• Elastic
• Perfectly inelastic
• Unitary elastic

What does the Law of Supply state regarding price and quantity supplied?

• As the price decreases, the quantity supplied increases.
• As the price increases, the quantity supplied increases.
• Supply is unaffected by price changes.
• Quantity supplied is always lower than quantity demanded.

What occurs at market equilibrium?

• Quantity demanded equals quantity supplied.
• Prices are set arbitrarily by producers.
• Quantity supplied exceeds quantity demanded.
• Quantity demanded exceeds quantity supplied.

Which scenario describes a shortage in the market?

• There is an equal amount of supply and demand.
• Prices are set too high.
• The quantity demanded exceeds the quantity supplied.
• The quantity supplied exceeds the quantity demanded.

What is a surplus in economic terms?

• When the quantity demanded is greater than the quantity supplied.
• When the quantity supplied is greater than the quantity demanded.
• When prices are set at equilibrium.
• When demand is perfectly elastic.