Cuestionario: Understanding Microeconomic Market Dynamics — 9 preguntas

1. What happens to demand when the price of a good increases, assuming other factors remain constant?

A. Demand increases

B. Demand becomes perfectly elastic

C. Demand decreases

D. Demand remains unchanged

Answer: (C)

Explicación

When the price of a good increases, the law of demand states that the quantity demanded typically decreases, assuming other factors are constant. This inverse relationship is fundamental in microeconomics.

2. What is the formula for demand (QD) as given in the revision sheet?

A. QD = 200 - 10P

B. QD = 50 + 20P

C. QD = 100 - 5P

D. QD = 150 + 15P

Answer: (A)

Explicación

The demand formula provided is QD = 200 - 10P, which shows the relationship between quantity demanded and price; the other formulas are incorrect examples.

3. If a product has a price elasticity of demand (PED) of 0.8, how would you classify its demand?

A. Elastic demand

B. Inelastic demand

C. Perfectly elastic demand

D. Unitary elastic demand

Answer: (B)

Explicación

A PED of 0.8 indicates inelastic demand because it is less than 1. Inelastic demand means that the quantity demanded is relatively unresponsive to price changes.

4. Which of the following describes a market with high sensitivity to price changes?

A. Elastic market

B. Inelastic market

C. Market with Unit elasticity

D. Public good market

Answer: (A)

Explicación

An elastic market is highly responsive to price changes, meaning small changes in price lead to large changes in quantity demanded or supplied.

5. Which of the following best describes a public good?

A. Excludable and non-rival in consumption

B. Non-excludable and non-rival in consumption

C. Excludable and rival in consumption

D. Non-excludable and rival in consumption

Answer: (B)

Explicación

A public good is characterized by being non-excludable (cannot prevent others from using it) and non-rivalrous (one person's use does not diminish another's). Examples include national defense and public broadcasting.

6. According to the sheet, what is true about goods with negative cross-price elasticity (XED)?

A. They are complements

B. They are substitutes

C. They are normal goods

D. They are inferior goods

Answer: (A)

Explicación

Negative cross-price elasticity indicates that the goods are complements, meaning that an increase in the price of one decreases the demand for the other.

7. What characteristic defines a public good?

A. Non-rival and non-excludable

B. Excludable and rival

C. Private and consumable

D. Produced only by private firms

Answer: (A)

Explicación

Public goods are non-rival and non-excludable, such as national defense, which means one person's use does not diminish another's and people cannot be excluded from using them.

8. Who is the author associated with the development of demand and supply concepts in the 1870s?

A. Alfred Marshall

B. Adam Smith

C. John Maynard Keynes

D. David Ricardo

Answer: (A)

Explicación

Alfred Marshall, a foundational figure in microeconomics, developed many concepts related to demand and supply in the late 19th century.

9. Which statement correctly describes inelastic demand?

A. PED < 1

B. PED > 1

C. PED = 1

D. PED = 0

Answer: (A)

Explicación

Inelastic demand means PED < 1, indicating that the quantity demanded is less responsive to price changes.