When is supply inelastic?

Quantity change less than price

What is a disadvantage of a command economy?

Inefficiency and lack of innovation

When is demand elastic?

Quantity change greater than price

What does the law of diminishing returns explain?

Marginal product decreases with input

What happens with increased supply and demand?

Increase in equilibrium quantity

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Economics Basics

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Test your knowledge on the fundamental concepts of supply and demand in economics

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Questions 40

Answers

1
What decreases wheat supply?
Tech advancement
Increase in fertilizer price
Price expectation fall
Government subsidy
2
What is a maximum price imposed by government?
Price floor
Subsidy
Tax
Price ceiling
3
What do prices serve in a market economy?
Guide resource allocation
Government control tool
Measure intrinsic value
Guarantee fair income
4
What is a goal in a socialist-leaning system?
Laissez-faire system
Economic equity
Pure command system
Pure market system
5
When is supply inelastic?
Quantity change greater than price
Quantity change less than price
Producers responsive to demand
Small price change, large quantity
6
What happens if a complement's price increases?
Remain constant
Increase
Decrease
Become more elastic
7
What is characterized by private ownership?
Communism
Socialism
Fascism
Capitalism
8
What is a consequence of a binding price floor?
Shortage of good
Lower prices for consumers
Increased production efficiency
Surplus of good
9
What is an advantage of a market economy?
Eliminate business cycles
Efficient resource allocation
Basic living standard for all
Guarantee full employment
10
What if total revenue increases with price decrease?
Unit elastic
Elastic
Perfectly inelastic
Inelastic
11
What do rent controls aim to do?
Increase affordable housing
Increase rental profitability
Make housing affordable
Reduce government intervention
12
What is a disadvantage of a command economy?
Inefficiency and lack of innovation
Frequent recessions
Income inequality
High unemployment
13
What is a consequence of price controls?
Equitable goods distribution
Increased market efficiency
Greater pricing transparency
Emergence of black markets
14
What is nationalization associated with?
Free-market approach
Purely capitalist system
Minimal government involvement
Command or socialist system
15
What illustrates the law of demand?
Coffee price up, tea demand up
Gas price falls, drive more
Income rises, buy more
Tastes determine purchases
16
What happens with more sellers in a market?
No change in supply
Increase in supply
Decrease in supply
Movement along supply curve
17
What does the supply curve show?
Income constant
Demand curve constant
Other factors constant
Tastes do not change
18
What happens if substitute price increases?
Increase
Become more elastic
Remain unchanged
Decrease
19
When is demand elastic?
Income change proportional
Quantity change greater than price
Equal quantity and price change
Large price change, small quantity
20
What guides decisions in a traditional economy?
Cultural norms
Technological advancement
Government policies
Market prices
21
What motivates production in a market economy?
Tradition and custom
Profit incentive
Government mandates
Social welfare
22
What least shifts demand for apples?
Change in preferences
Change in income
Change in apple price
Change in orange price
23
What happens if demand increases and supply decreases?
Remain unchanged
Depends on shifts
Decrease
Increase
24
What indicates a surplus in the market?
Demand curve shifted right
Price above equilibrium
Demand greater than supply
Price below equilibrium
25
What occurs with economies of scale?
Constant average total costs
Increasing marginal costs
Higher average total costs
Lower average total costs
26
What happens at equilibrium price?
No price change tendency
Only buyers can afford
Quantity demanded exceeds supply
Quantity supplied exceeds demand
27
What is a variable factor in the short run?
Fixed
Zero
Variable
Increasing
28
What does the law of diminishing returns explain?
Average fixed cost decreases
Total costs increase with output
Economies of scale occur
Marginal product decreases with input
29
What is the elasticity of necessity goods?
Elastic
Perfectly elastic
Inelastic
Unit elastic
30
What is a feature of a command economy?
Mixed economy
Traditional economy
Market economy
Centralized planning
31
What is a minimum price imposed by government?
Tariff
Quota
Price ceiling
Price floor
32
What is the goal of price ceilings?
Increase producer surplus
Encourage production
Reduce market shortages
Make goods affordable
33
What do minimum wage laws aim to do?
Ensure living standard
Increase labor demand
Lower labor cost
Reduce unemployment
34
What results from price floors above equilibrium?
Decrease in quality
No change in quantity
Shortage of good
Surplus of good
35
What happens to demand with lower income?
Movement along curve
Shift to the right
Shift to the left
No change
36
What are most economies classified as?
Mixed economies
Traditional economies
Pure market economies
Pure command economies
37
What is total cost the sum of?
Total fixed and variable cost
Explicit and implicit costs
Marginal and average total cost
Average fixed and variable cost
38
What characterizes a laissez-faire market?
Mixed economy
Command economy
No government intervention
Socialism
39
What does marginal product refer to?
One more variable input
Cost of fixed inputs
One more unit sold
One more unit of all inputs
40
What happens with increased supply and demand?
Decrease in equilibrium price
No change in equilibrium quantity
Increase in equilibrium quantity
Decrease in equilibrium quantity

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