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Economics Basics: Market and Demand

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Questions and Answers

What is the definition of a market?

A system that brings buyers and sellers together to exchange goods (correct)
A physical place where buyers and sellers meet
An arrangement where only buyers participate
A system where only sellers participate

What is the Law of Demand stating?

As the price of a product decreases, the quantity demanded increases (correct)
As the price of a product increases, the quantity demanded also increases
As the price of a product decreases, the quantity demanded decreases
The price of a product has no effect on the quantity demanded

What is the income effect?

A decrease in the income of buyers
A decrease in price is similar to an increase in income (correct)
A change in the number of buyers
An increase in the price of a product

What is the effect of a decrease in price on the quantity demanded?

The quantity demanded increases (C) Signup and view all the answers

What is the term for the extra satisfaction gained from consuming one more of a product?

Marginal utility (B) Signup and view all the answers

What happens to the demand for inferior goods when a buyer's income increases?

The demand for the inferior goods decreases. (D) Signup and view all the answers

What is the relationship between the price of a good and its complementary good?

If the price of a good decreases, the demand for its complement will increase. (A) Signup and view all the answers

What represents a change in the quantity demanded?

A move from one point to another point on a single demand curve. (A) Signup and view all the answers

What is the result of producing quantities greater than or less than the allocative efficient level of output?

Deadweight loss is created. (B) Signup and view all the answers

What is the term for the sum of consumer surplus and producer surplus?

Total surplus. (C) Signup and view all the answers

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