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Questions and Answers

What does the Law of Demand state?

  • As the price of a good increases, the quantity demanded decreases. (correct)
  • As the price of a good decreases, the quantity demanded decreases.
  • As the price of a good increases, the quantity demanded increases.
  • As the price of a good decreases, the quantity demanded increases.

What is the difference between Movement along the Demand Curve and Shift of the Demand Curve?

  • Movement along the demand curve is caused by a change in income, while shift of the demand curve is caused by a change in price.
  • Movement along the demand curve is caused by a change in price, while shift of the demand curve is caused by a change in income.
  • Movement along the demand curve represents a change in quantity demanded due to a change in price, while shift of the demand curve represents a change in demand due to a non-price factor. (correct)
  • Movement along the demand curve represents a change in demand due to a non-price factor, while shift of the demand curve represents a change in quantity demanded due to a change in price.

What does Price Elasticity of Demand measure?

  • The responsiveness of quantity demanded to a change in consumer preferences.
  • The responsiveness of quantity demanded to a change in income.
  • The responsiveness of quantity demanded to a change in the prices of related goods.
  • The responsiveness of quantity demanded to a change in price. (correct)

What are the Determinants of Elasticity?

<p>Availability of substitute goods, proportion of income spent on the good, and time period considered. (A)</p> Signup and view all the answers

Why is Demand Forecasting important in business?

<p>It helps in making informed decisions about production and inventory management. (A)</p> Signup and view all the answers

What is the difference between Price Elasticity and Cross Elasticity?

<p>Price Elasticity measures the responsiveness of quantity demanded to a change in price, while Cross Elasticity measures the responsiveness of demand for one good to a change in the price of another good. (B)</p> Signup and view all the answers

What determines the elasticity of demand?

<p>The availability of substitute goods, the proportion of income spent on the good, and the time period considered. (A)</p> Signup and view all the answers

What is the importance of Demand Forecasting in business?

<p>It helps in production planning, inventory management, and pricing strategies. (B)</p> Signup and view all the answers

What is the Law of Demand?

<p>It states that, all else being equal, as the price of a good increases, the quantity demanded decreases. (C)</p> Signup and view all the answers

What is the difference between Movement along the Demand Curve and Shift of the Demand Curve?

<p>Movement along the demand curve is caused by a change in price, while the shift of the demand curve is caused by a change in factors other than price. (B)</p> Signup and view all the answers

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