Lectures 2 & 3 Quiz: Demand, Supply, and Market Equilibrium

The 'Demand Function' is:

• It is the function relating the price of a certain good or service, and the quantity that producers are willing to produce at each price.

• It is the function describing the relationship between the percentage of change in prices and the percentage of change in quantities demanded of a certain product.

• It is the function relating the price of a certain good or service, and the quantity that consumers are willing to purchase at each price.

• It is the function relating the average income of individuals, and the quantity of a product that these individuals are willing to purchase at level of income.

The law of demand can be explained by the following effects:

• Tastes & Preferences.

• Availability of goods & services.

• Population growth.

• Income effect.

All of the following are considered types of 'Elasticity', except:

• Income elasticity

• Cross elasticity

• None of the above

• Price elasticity

All the following are factors affecting demand, except:

• Prices of complements.

• Income.

• Production technology.

• Prices of substitutes.

When demand for a certain product is elastic, a 1% increase in the price of this product will:

• Decrease quantity demanded by 1%.

• Decrease quantity demanded by more than 1%.

• Decrease quantity demanded by less than 1%.

• No effect.

When demand for a certain product is inelastic, a 1% increase in the price of this product will:

• No effect.

• Decrease quantity demanded by less than 1%.

• Decrease quantity demanded by more than 1%.

• Decrease quantity demanded by 1%.

All the following are factors affecting elasticity, except:

• Consumer expectations.

• Necessity.

• Percentage of Income

• Availability of substitutes.

An increase in the average income of consumers will have the following effect on the demand of a product/service:

• No effect.

• Quantity demanded will increase.

• Demand will decrease.

• Demand will increase.

An increase in the price of a complementary product, will have the following effect on the demand of a product/service:

• No effect.

• Quantity demanded will increase.

• Demand will decrease.

• Demand will increase.

An increase in the price of a product, will have the following effect on the demand:

• Quantity demanded will decrease.

• Quantity demanded will increase.

• Demand will decrease.

• Demand will increase.