A clothing store is offering a major sale, reducing prices by 50%, what will likely happen?

B) Demand for clothing will increase

Why is demand for luxury vacations more elastic than demand for water?

Water has fewer substitutes and is a necessity

If the price of coffee increases significantly, what is a likely consumer response?

Switch to tea or another substitute

Why do movie theaters often charge less for matinee showings?

People have lower demand for movies during the day

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Economics Basics

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Test your knowledge on fundamental concepts of economics and market dynamics

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Questions 10

Answers

1
A drought reduces the supply of wheat. What happens to the market for bread?
price of bread falls
demand for bread increases
supply of bread increases
Price of bread rises
2
A clothing store is offering a major sale, reducing prices by 50%, what will likely happen?
B) Demand for clothing will increase
The equilibrium price will rise
Supply of clothing will increase
A) People will buy less clothing
3
A new law makes it more expensive to produce electric cars. What happens in the market for electric cars?
Equilibrium price decreases
Supply increases
Demand increases
Supply decreases
4
Which product is likely to have the most inelastic demand?
Designer handbags
Concert tickets
Gasoline
video games
5
A new video game console is released, and demand is much higher than expected. What is likely to happen to the price?
Price will stay the same
supply will decrease
Price will Increase
Price will decrease
6
Why is demand for luxury vacations more elastic than demand for water?
Vacation prices never change
Water has fewer substitutes and is a necessity
Water is not subject to supply and demand
People always want vacations
7
If a new brand of sneakers becomes extremely popular due to celebrity endorsements, what happens to demand?
It decreases
It stays the same
it increases
it depends on supply
8
If the price of coffee increases significantly, what is a likely consumer response?
Completely stop drinking coffee
Buy more coffee before the price rises further
Buy the same amount regardless of price
Switch to tea or another substitute
9
A company making smartphones finds that when they raise their prices 10%, their revenue decreases. Because..
Demand is elastic
Demand is inelastic
Supply is increasing
The product is a necessity
10
Why do movie theaters often charge less for matinee showings?
The cost of showing movies is lower in the afternoon
Theaters make less money on concessions in the evening
The government requires lower daytime prices
People have lower demand for movies during the day

Economics Basics Flashcards | StudBud