AS Level Eco Unit 2. The Price System & the Microeconomy

What is the definition of 'Effective Demand'?

• The total supply for a particular product in the market

• The quantity of a good a producer is willing and able to offer for sale over a range of prices, over a given period of time

• The relationship between market supply and the price of a product

• Adding together the quantity supplied of each individual producer at each price

Fill in the blank: According to the Law of Supply, if price rises, quantity supplied _______.

• rises

• falls

• remains constant

• is unaffected

What does the Supply Curve illustrate?

• Relationship between supply and price

• Relationship between demand and supply

• Relationship between market supply and the price of a product

• Adding together the quantity supplied of each individual producer at each price

Price is NOT the only factor affecting an individual's demand for a good/service. Other factors include _______.

• income

• weather

• brand

• location

What is a Normal Good?

• A good whose demand rises as income rises and falls as income falls.

• A good whose demand falls as income rises and rises as income falls.

• A good that is not affected by income changes.

Fill in the blank: An Inferior Good is a good whose demand ______ as income rises and rises as income falls.

• falls

• increases

• remains constant

• doubles

Explain the relationship between substitutes and complements in the context of goods. Provide examples.

• Substitutes are goods that can replace each other, while complements are goods that are used together. For example, tea and coffee are substitutes, while printers and ink cartridges are complements.

• Substitutes are goods that are used together, while complements are goods that can replace each other. For example, tea and coffee are complements, while printers and ink cartridges are substitutes.

• Substitutes and complements are the same, both can replace each other. For example, tea and coffee, and printers and ink cartridges are both substitutes and complements.

• Substitutes and complements have no relationship in the context of goods.

What happens to the demand for tea if the price of coffee rises?

• Demand for tea rises.

• Demand for tea falls.

• Demand for tea remains unchanged.

Fill in the blank: Goods that are consumed together are known as ______.

• Complements

• Substitutes

• Alternatives

• Replacements

The effect of advertising on consumer preferences is:

• It has no effect

• It influences consumer preferences

• It negatively impacts consumer preferences

• It only affects certain demographics