A good is in composite demand when:

it is demanded for two or more distinct uses.

What causes excess demand to occur?

When the price in a market is below the equilibrium price

Which of these is an advantage of specialisation?

increased productivity, lower average costs

Quantity that consumers are willing and able to buy

When does excess supply occur?

when quantity supplied exceeds quantity demanded

excess supply arises when

price is greater than the market equilibrium price

What is price elasticity?

change in quantity relative to change in price

Labour is a derived demand, this means_____?

it is derived from the demand of goods and services

What Causes a shift in the Demand

income, Consumer Expectations, Population, Consumer Tastes & Advertising

A demand for bricklayers is said to be an example of derived demand because it depends on

the number of new houses demanded

What is the formula for Price Elasticity of Demand

%change in quantity demanded / %change in price

Define Opportunity Cost

The Value of the Next Best Alternative Forgone

What is derived demand?

Where demand arises because there is demand for another good

The demand for an inferior good

decreases when income increases

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price determination in a competitive market

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Questions 26

Answers

1
A good is in composite demand when:
it is a substitute for another good.
it is bought together with another good.
it is demanded for two or more distinct uses.
demand for the good results from demand for another good.
2
Joint demand is also called
normal demand
derived demand
complementary demand
substitute demand
3
The demand line slopes
upwards left to right
upwards right to left
straight across
downwards left to right
4
When a product is said to be price elastic, it will have a price elasticity of demand value of
Between 0 and 1
Approximately 1
A positive value (i.e., greater than 0)
Greater than 1
5
What causes excess demand to occur?
When the price in a market is the same as the equilibrium
When the price in a market is below the equilibrium price
When the price in a market is above the equilibrium price
6
Which of these is an advantage of specialisation?
increased productivity
higher cost of traing workers
workers may become bored
lower average costs
7
What is demand?
Quantity that consumers are willing and able to buy
Energy source from dead animals and plants
Singapore
Availability of abundant low cost energy
8
Who determines demand?
Sellers
Buyers
9
6% increase price of X and a resulting 6% decrease of X demanded. Price elasticity of demand X
36
0
6
1
10
When does excess supply occur?
equilibrium
when quantity supplied exceeds quantity demanded
you have a surplus
you have a shortage
11
excess supply arises when
price is lower than the market equilibrium price
price is greater than the market equilibrium price
12
A price of $2 would a cause a
surplus of 200
shortage of 300
shortage of 400
surplus of 400
13
What is price elasticity?
when the government stretches price margins
change in quantity equals change of supply
change in quantity relative to change in price
a price falls below the price floor
14
Labour is a derived demand, this means_____?
C2 = A2+B2
it comes from a firm’s income
it is derived from the demand of goods and services
it comes from a firm’s income
15
What Causes a shift in the Demand
income
Consumer Expectations
Population
Consumer Tastes & Advertising
16
A demand for bricklayers is said to be an example of derived demand because it depends on
the number of new houses demanded
the supply of bricks
the productivity of bricklayers
the wages of bricklayers
17
What is the formula for Price Elasticity of Demand
%change in quantity demanded x %change in income
%change in quantity demanded / %change in price
%change in quality demanded / %change in price
%change in quantity demanded / %change in profit
18
If the price elasticity is between 0- -1 is it inelastic or elastic?
Inelisstic
Elastic
Corelastic
Inelastic
19
Define Opportunity Cost
The Alternative Cost
The Value of the Best Alternative
The Price of an Alternative Cost
The Value of the Next Best Alternative Forgone
20
When price elasticity of demand is 1, when the store decreases the price by 10%, the demand...
decreases 10%
no change in demand
not predictable
increases 10%
21
Which of these factors may cause a shift in the demand curve?
A change in the size of the population
Good or bad publicity
All of the above
A change in trends and fashions
22
What is derived demand?
Where demand rises following a price change
Where demand remains unchanged following a price change
Where demand falls following a price change
Where demand arises because there is demand for another good
23
A leftward shift in the demand curve could be caused by which of the following?
Tax increase
An improvement in technology
Decrease in the number of sellers
Decrease in income
24
When there is excess demand there is a...
Surplus
Shortage
25
Law of demand
P up, Qd down
P up, Qd up
26
The demand for an inferior good
increases when the demand for Ramen noodles increases
increases when income increases
decreases when income increases
decreases when price increases

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