Economics Demand Principles Quiz

The opportunity cost of trading is the same for both parties, leading to no gains. Neither party can reach a higher point of consumption.

A change in the price of a good results in a movement along the demand curve, meaning the quantity demanded changes.

If other factors affecting demand (apart from price) change, the whole demand curve will shift. This indicates a new relationship between price and quantity demanded.

Goods that can be used in place of each other. If the price of one substitute good falls, the demand for the other good will decrease.

Goods that are used together. If the price of one complement good falls, the demand for the other good will increase.

The quantity supplied is the total amount of a good or service that a producer is willing and able to sell at a particular price. Supply refers to the overall relationship between price and quantity supplied.

Demand is a function influenced by multiple factors, not just price. These factors include income, tastes, price of substitutes, and price of complements.

Represents the choices made by producers, highlighting the behavior of firms. It is a functional relationship between price and quantity supplied.

The opportunity cost of producing one good is the amount of another good that must be sacrificed. For example, if a country produces more shirts, it must give up producing some wheat.

The slope of the production possibilities frontier (PPF) represents the opportunity cost of producing one good in terms of the other. A steeper slope implies a higher opportunity cost.

Indicates that as more of a good is produced, the opportunity cost of producing additional units increases. This is because resources are not perfectly adaptable to different tasks.

A measure of how responsive the quantity demanded of a good is to changes in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price.

When the percentage change in quantity demanded is greater than the percentage change in price, the demand is elastic.

When the percentage change in quantity demanded is less than the percentage change in price, the demand is inelastic.

Demand that is perfectly sensitive to price. A small change in price leads to an infinitely large change in quantity demanded.

Demand that is completely unresponsive to price changes. Consumers will buy the same quantity, regardless of the price.

The revenue generated from the sale of a good. It is calculated by multiplying the price per unit by the quantity sold.

If the price elasticity of demand is greater than 1, lowering the price will increase total revenue. This is because the increase in quantity sold will outweigh the decrease in price.

If the price elasticity of demand is less than 1, raising the price will increase total revenue. This is because the increase in price outweighs the decrease in quantity sold.

A measure of how responsive the quantity demanded of one good is to changes in the price of another good.

A measure of how much a seller will change the quantity of a good or service they offer for sale when the price changes.

The responsiveness of quantity demanded of a good or service to a change in a consumer's income.

A good whose demand decreases as income rises.

A good whose demand increases as income rises.

A good whose demand increases at a rate faster than the growth in income.

The measure of how much a change in the price of a good affects the quantity demanded.

The availability of close substitutes, the relative need for a good, and the proportion of income spent on a good.

The availability of inputs, the flexibility of the production process, and the time needed to adjust to changes in price.

The quantity of a good or service that sellers are willing and able to offer for sale at a given price.

A factor that influences the quantity supplied, other than the price of the good itself. Examples include the price of inputs, technology, expectations, and the number of sellers.

A movement along the supply curve, caused by a change in the price of the good.

A shift of the entire supply curve, caused by a change in a non-price determinant of supply.

The relationship between the price of a good and the quantity supplied. As the price increases, the quantity supplied also increases.

A situation where the price of a good is higher than the equilibrium price, resulting in a surplus of the good.

A situation where the price of a good is lower than the equilibrium price, resulting in a shortage of the good.

The price at which the quantity supplied and the quantity demanded are equal.

The quantity of a good that is exchanged at the equilibrium price.

Any cost incurred during an economic transaction, including monetary costs, time, and inconvenience.

An individual who cannot influence the price of a good in the market.

A graphical representation of all possible combinations of goods that can be produced with a given set of resources.

A combination of goods that can be produced with the available resources on the PPF.

A combination of goods that cannot be produced with the available resources on the PPF.

The desire and ability of consumers to purchase a good or service at different prices.

An equation or a table that shows the relationship between the price of a good and the quantity demanded.

A graphical representation of the relationship between the price of a good and the quantity demanded. It is typically downward sloping.

A measure of how responsive the quantity demanded is to changes in price.

Demand is unit elastic when the percentage change in quantity demanded is equal to the percentage change in price.

The midpoint method calculates the percentage change in quantity demanded or price relative to the midpoint (average) of the two data points.

Products that satisfy similar needs but have slight differences in features.

Products that are less similar in price, quality, and use.

Goods that are necessities for daily life.