Types of Price Elasticity of Demand and Demand Variation

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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?

Consumers always make rational decisions. Signup and view all the answers

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

Determinants of Demand Signup and view all the answers

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

Consuming water when extremely thirsty. Signup and view all the answers

What is the main focus of the study of microeconomics?

Determinants of Demand Signup and view all the answers

How does understanding Elasticity of Demand help businesses?

By adjusting production levels based on consumer response. Signup and view all the answers

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

Macroeconomics Signup and view all the answers

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

Microeconomics Signup and view all the answers

What is the focus of Micro Economics?

Individual economic units Signup and view all the answers

Which of the following is NOT a type of Monopoly?

Oligopoly Signup and view all the answers

What is the significance of studying Micro Economics?

Allocating scarce resources efficiently Signup and view all the answers

Which statement best describes the features of Micro Economics?

Examines individual economic units Signup and view all the answers

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

Natural Monopoly Signup and view all the answers

What does the Law of Supply describe?

The relationship between price and quantity supplied. Signup and view all the answers

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

It decreases. Signup and view all the answers

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

Constant consumer preferences. Signup and view all the answers

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

Supply decreases when production costs increase. Signup and view all the answers

How does the Law of Supply relate to producer behavior?

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

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

Price Elasticity of Demand Signup and view all the answers

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

Elastic demand Signup and view all the answers

What does an Income Elasticity of Demand of 0 suggest?

Inferior good 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?

Cross Elasticity of Demand Signup and view all the answers

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

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