QCM : Understanding Market Mechanics — 9 questions

Explication

The law of demand states that there is an inverse relationship between price and quantity demanded, meaning that as price decreases, demand increases, and vice versa.

Explication

A market is defined as a platform for the exchange of goods and services, which can be either physical or virtual. This distinguishes it from specific types like goods-only markets or regulated pricing zones.

Explication

Technological improvements in production typically affect supply, not demand. Demand shifts are usually caused by changes in income, tastes, demographics, advertising, or expectations.

Explication

The Law of Demand states there is an inverse relationship between price and quantity demanded, meaning as price decreases, demand increases.

Explication

Market equilibrium occurs when the quantity demanded equals the quantity supplied, and the price adjusts to reach this point, clearing the market of shortages or surpluses.

Explication

An increase in consumer income can lead to higher demand, shifting the demand curve to the right. The other options generally cause movements along the curve or shifts in supply.

Explication

Supply curves shift due to factors like technology, input costs, natural events, and expectations. Consumer tastes primarily affect demand.

Explication

PED measures how much demand responds to price changes, indicating demand elasticity or rigidity.

Explication

A surplus occurs when supply exceeds demand at a particular price, often leading to downward pressure on prices.