Analyzing the Impact of Changing Tastes and Expectations on Demand

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Which two factors determine the quantity of each good produced and the price at which it is sold in a market economy?

Production and consumption
Income and resources
Utility and scarcity
Supply and demand (correct)

What is a market?

A place where goods are produced
A group of buyers and sellers of a particular good or service (correct)
A system of exchange between countries
A government institution that regulates prices

What happens to the price of vegetables in the market when there is a flood outside Dhaka?

It remains the same
It falls
It is unpredictable
It rises (correct)

What happens to the price of airline tickets during summer?

It rises (A) Signup and view all the answers

What happens to the price of oil in the world market when there is war in the Middle East or Ukraine?

It increases (D) Signup and view all the answers

What do supply and demand determine in a market economy?

Both prices and quantity produced (C) Signup and view all the answers

What must be considered first to understand how any event or policy will affect the economy?

Supply and demand (C) Signup and view all the answers

Which of the following is a characteristic of a perfectly competitive market?

Each seller offers a standardized product. (A) Signup and view all the answers

What is the relationship between price and quantity demanded according to the Law of Demand?

As price decreases, quantity demanded increases. (A) Signup and view all the answers

What is the term for the sum of all the individual demands for a particular good or service?

Market demand (D) Signup and view all the answers

What happens to the demand curve when there is a change in factors other than price?

The curve shifts. (B) Signup and view all the answers

What is the term for goods that are used together and a fall in the price of one good raises the demand for the other?

Complements (C) Signup and view all the answers

What is the term for goods that are used together and a fall in the price of one good reduces the demand for the other?

Substitutes (C) Signup and view all the answers

What is the most obvious determinant of demand for a particular good?

Tastes (B) Signup and view all the answers

Which of the following is NOT a determinant of quantity supplied?

Price (C) Signup and view all the answers

Which one of the following is true regarding a shift in the supply curve?

It is called a change in supply. (C) Signup and view all the answers

What happens to the quantity supplied when the price of ice cream rises?

It increases (C) Signup and view all the answers

Which one of the following is true regarding a movement along a fixed supply curve?

It is called a change in quantity supplied. (B) Signup and view all the answers

Which of the following is an example of a policy aimed at reducing the quantity of cigarettes demanded at any given price?

Mandatory health warnings on cigarette packages (D) Signup and view all the answers

Which one of the following is true regarding a shift in the demand curve?

It is called a change in demand. (A) Signup and view all the answers

How does an increase in input prices affect the supply of ice cream?

It decreases the supply (D) Signup and view all the answers

Which one of the following is true regarding a movement along a fixed demand curve?

It is called a change in quantity demanded. (A) Signup and view all the answers

What happens to the supply of ice cream when there is an advance in technology?

It increases (D) Signup and view all the answers

What is equilibrium?

A situation where the price is at the level where quantity supplied equals quantity demanded. (C) Signup and view all the answers

What is the relationship between price and quantity supplied according to the law of supply?

Directly proportional (D) Signup and view all the answers

What is equilibrium price?

The price that balances quantity supplied and quantity demanded. (A) Signup and view all the answers

What is the difference between a movement along the supply curve and a shift of the supply curve?

A movement along the curve represents a change in price, while a shift represents a change in other factors (A) Signup and view all the answers

What is equilibrium quantity?

The quantity supplied and the quantity demanded at the equilibrium price. (B) Signup and view all the answers

What happens to the price when there is a surplus?

The price falls. (C) Signup and view all the answers

What happens to the price when there is a shortage?

The price rises. (B) Signup and view all the answers