Chapter 2 Quiz

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What does the Law of Demand state?

As the price of a good increases, the quantity demanded decreases.

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

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.

What does Price Elasticity of Demand measure?

The responsiveness of quantity demanded to a change in price.

What are the Determinants of Elasticity?

Availability of substitute goods, proportion of income spent on the good, and time period considered.

Why is Demand Forecasting important in business?

It helps in making informed decisions about production and inventory management.

What is the difference between Price Elasticity and Cross Elasticity?

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.

What determines the elasticity of demand?

The availability of substitute goods, the proportion of income spent on the good, and the time period considered.

What is the importance of Demand Forecasting in business?

It helps in production planning, inventory management, and pricing strategies.

What is the Law of Demand?

It states that, all else being equal, as the price of a good increases, the quantity demanded decreases.

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 price, while the shift of the demand curve is caused by a change in factors other than price.

Test your understanding of the theory of demand and supply with this quiz on Chapter 2, covering the Law of Demand and Elasticity of Demand. This quiz will assess your knowledge of demand, determinants of demand, the Law of Demand, movement along the demand curve, shift of the demand curve, elasticity, and its measurement. Sharpen your grasp of these fundamental economic concepts.

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