Types of Price Elasticity of Demand and Demand Variation
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Questions and Answers

What concept measures the responsiveness of quantity demanded to a change in price?

  • Elasticity of Demand (correct)
  • Law of Demand
  • Law of Supply
  • Elasticity of Supply
  • What does the Law of Diminishing Marginal Utility state?

  • As the price decreases, demand increases.
  • Consumers are rational decision-makers.
  • As consumption increases, the additional satisfaction decreases. (correct)
  • Consumers will always maximize utility.
  • What does macroeconomics focus on?

  • Microeconomic factors
  • Determinants of Demand (correct)
  • Determinants of Supply
  • Economic activities at the individual level
  • Which assumption is made in relation to the Law of Diminishing Marginal Utility?

    <p>Consumers always make rational decisions.</p> Signup and view all the answers

    Which of the following is an example of a microeconomic concept?

    <p>Determinants of Demand</p> Signup and view all the answers

    What is an exception to the Law of Diminishing Marginal Utility?

    <p>Consuming water when extremely thirsty.</p> Signup and view all the answers

    What is the main focus of the study of microeconomics?

    <p>Determinants of Demand</p> Signup and view all the answers

    How does understanding Elasticity of Demand help businesses?

    <p>By adjusting production levels based on consumer response.</p> Signup and view all the answers

    Which level of economic analysis includes studying national income and output?

    <p>Macroeconomics</p> Signup and view all the answers

    What type of economics deals with individual choices and market behavior?

    <p>Microeconomics</p> Signup and view all the answers

    What is the focus of Micro Economics?

    <p>Individual economic units</p> Signup and view all the answers

    Which of the following is NOT a type of Monopoly?

    <p>Oligopoly</p> Signup and view all the answers

    What is the significance of studying Micro Economics?

    <p>Allocating scarce resources efficiently</p> Signup and view all the answers

    Which statement best describes the features of Micro Economics?

    <p>Examines individual economic units</p> Signup and view all the answers

    Which type of Monopoly results from ownership or control of a key resource?

    <p>Natural Monopoly</p> Signup and view all the answers

    What does the Law of Supply describe?

    <p>The relationship between price and quantity supplied.</p> Signup and view all the answers

    According to the Law of Supply, what happens to the quantity supplied as price decreases?

    <p>It decreases.</p> Signup and view all the answers

    What is one of the assumptions of the Law of Supply?

    <p>Constant consumer preferences.</p> Signup and view all the answers

    Which of the following is an exception to the Law of Supply?

    <p>Supply decreases when production costs increase.</p> Signup and view all the answers

    How does the Law of Supply relate to producer behavior?

    <p>It influences how producers adjust their output in response to price changes.</p> Signup and view all the answers

    Which concept helps in understanding how demand changes with respect to price changes?

    <p>Price Elasticity of Demand</p> Signup and view all the answers

    What does Price Elasticity of Demand indicate when it is greater than 1?

    <p>Elastic demand</p> Signup and view all the answers

    What does an Income Elasticity of Demand of 0 suggest?

    <p>Inferior good</p> Signup and view all the answers

    Which concept measures the responsiveness of quantity demanded for one good due to a change in the price of another good?

    <p>Cross Elasticity of Demand</p> Signup and view all the answers

    How does the concept of Price Elasticity of Demand help businesses make pricing decisions?

    <p>By evaluating the impact of changes in price on sales volume</p> Signup and view all the answers

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