Q. In general, a flatter demand curve is more likely to be:
✅ Correct Answer: (A)
price elastic
MicroEconomics, Theory and Applications 1 MCQs and Notes
Q. The price elasticity of demand is defined as
✅ Correct Answer: (C)
the percentage change in the quantity demanded of a good divided by the percentage change in the price of that good.
Q. If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is
✅ Correct Answer: (C)
price elastic.
Q. An inferior good is one for which an increase in income causes a(n)
✅ Correct Answer: (D)
decrease in demand.
Q. Which of the following shifts the demand for watches to the right?
✅ Correct Answer: (C)
a decrease in the price of watch batteries if watch batteries and watches are complements
Q. If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is:
✅ Correct Answer: (C)
a substitute good
Q. The law of supply states that an increase in the price of a good:
✅ Correct Answer: (B)
increases the quantity supplied of that good.
Q. The law of demand states that an increase in the price of a good:
✅ Correct Answer: (B)
decreases the quantity demanded for that good.