Sumera Nawaz ECONOMICS - Microeconomics

If the price elasticity of demand for a good is less than 1, the demand is considered

A. Elastic. B. Unitary elastic. C. Inelastic. D. Perfectly elastic.

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Explanation

If the price elasticity of demand is less than 1, it indicates that quantity demanded is not very responsive to changes in price, hence the demand is considered inelastic.

Sumera Nawaz ECONOMICS - Microeconomics

Which of the following would lead to a rightward shift of the supply curve?

A. Improvement in technology. B. Increase in production costs. C. Increase in the price of a complementary good. D. Increase in the number of suppliers.

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Explanation

An improvement in technology increases efficiency and lowers production costs, leading to an increase in supply.

Sumera Nawaz ECONOMICS - Microeconomics

Which of the following is an example of a substitute good?

A. Peanut butter and jelly. B. Tea and coffee. C. Butter and margarine. D. Butter and bread.

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Explanation

Substitute goods are those that can be used in place of each other, such as tea and coffee.

Sumera Nawaz ECONOMICS - Microeconomics

If both supply and demand increase but the increase in supply is larger, what will happen to equilibrium price and quantity?

A. Price and quantity will both increase. B. Price and quantity will both decrease. C. Price will decrease and quantity will increase. D. Price will increase and quantity will decrease.

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Explanation

When both supply and demand increase, but the increase in supply is larger, the increase in quantity supplied will outweigh the increase in quantity demanded, leading to a decrease in price and an increase in quantity.

Sumera Nawaz ECONOMICS - Microeconomics

When is the price elasticity of supply perfectly inelastic?

A. When the percentage change in quantity supplied is zero for any change in price. B. When the quantity supplied is infinitely responsive to changes in price. C. When the quantity supplied does not change at all in response to a change in price. D. When the price remains constant regardless of changes in quantity supplied.

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Explanation

Perfectly inelastic supply means the quantity supplied does not change at all in response to changes in price.

Sumera Nawaz ECONOMICS - Microeconomics

If demand is perfectly elastic, what is the value of price elasticity of demand?

A. -1. B. Infinity. C. 0. D. 1.

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Explanation

Perfectly elastic demand means any change in price results in an infinite change in quantity demanded.

Sumera Nawaz ECONOMICS - Microeconomics

Which of the following events would lead to a decrease in the equilibrium price of oranges?

A. A decrease in consumer income. B. An increase in the price of apples (a substitute for oranges). C. A decrease in the number of orange producers. D. A decrease in the price of orange juice (a complement to oranges).

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Explanation

A decrease in the price of a complement to oranges (orange juice) would increase the demand for oranges, leading to a decrease in equilibrium price.

Sumera Nawaz ECONOMICS - Microeconomics

Which of the following statements about elasticity of demand is true?

A. Unitary elastic demand indicates that quantity demanded does not change with a change in price. B. Elastic demand curves are usually steeper than inelastic demand curves. C. Inelastic demand means consumers are very sensitive to price changes. D. Elasticity measures the responsiveness of quantity demanded to a change in price.

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Explanation

Elasticity of demand measures how much quantity demanded responds to a change in price. Elastic demand means consumers are sensitive to price changes.

Sumera Nawaz ECONOMICS - Microeconomics

If the demand for a product increases while its supply remains constant, what will happen to the equilibrium price and quantity?

A. Price will decrease and quantity will increase. B. Price will increase and quantity will decrease. C. Price and quantity will both increase. D. Price and quantity will both decrease.

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Explanation

An increase in demand with constant supply will lead to an increase in both equilibrium price and quantity traded.

Sumera Nawaz ECONOMICS - Microeconomics

Which of the following factors does NOT influence the demand for a good?

A. Price of related goods. B. Income of consumers. C. Future expectations. D. Cost of production.

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Explanation

The cost of production is a determinant of supply, not demand. Demand is influenced by factors such as price of related goods, income, and future expectations.