PE & ED CSE Q1

What is the law of demand?

• The law of demand states that as the price of a good or service increases, the quantity demanded increases.
• The law of demand states that as the price of a good or service decreases, the quantity demanded decreases.
• The law of demand states that as the price of a good or service increases, the quantity demanded remains constant.
• The law of demand states that as the price of a good or service increases, the quantity demanded decreases, and vice versa.

Difference between microeconomics and macroeconomics is

• Microeconomics deals with individual economic agents, while macroeconomics looks at the economy as a whole.
• Microeconomics analyzes inflation, while macroeconomics analyzes unemployment
• Microeconomics studies the behavior of firms, while macroeconomics studies the behavior of households
• Microeconomics focuses on international trade, while macroeconomics focuses on domestic trade

The main reason of economic instability is

Substitution effect in respect of demand means

• Change in quantity demanded due to a change in price relative to other goods
• Change in demand due to a change in income
• Change in quantity supplied due to a change in price
• Change in price due to a change in quantity demanded

When can the price elasticity of demand can be perfectly inelastic?

• When the price changes slightly
• When the demand curve is horizontal
• When the supply curve shifts
• When the quantity demanded does not change at all in response to a change in price.

Which products demand is elastic?

• rice

• oil

• salt

• gold

What is an example of market failure?

• Perfect competition with no externalities
• Monopoly with no barriers to entry
• Government intervention leading to efficient outcomes
• Allocative inefficiency in the presence of externalities is an example of market failure.

Which one of the following statements about market failure is correct?

• Market failure is always caused by externalities
• Market failure always leads to government intervention
• Market failure only occurs in perfectly competitive markets
• Market failure is a situation in which the allocation of goods and services is not efficient.

Qs = 25000p and Qd = 50000-10000p. Calculate market equilibrium.

• The market equilibrium is at a price of $1.75 and quantity of 32000 units.
• The market equilibrium is at a price of $1.00 and quantity of 40000 units.
• The market equilibrium is at a price of $1.43 and quantity of 35750 units.
• The market equilibrium is at a price of $2.00 and quantity of 30000 units.