24. The law of supply states that, other things remaining the same, A) demand in

Question

24. The law of supply states that, other things remaining the same, A) demand increases when supply increases. B) if the price of a good increases, firms buy less of it. C) if the price of a good increases, the quantity supplied increases. D) as people's income increase, the supply of goods increases E) if the price of a good increases, the supply increases 25. Oil refiners can refine a barrel of petroleum so that it yields either more home heating oil or more diesel fuel (They are substitutes in production). If the price of diesel fuel increases, there is A) an increase in the supply of home heating oil B) a decrease in the supply of home heating oil. C) an increase in the quantity of home heating oil supplied. D) a decrease in the quantity of home heating oil supplied. E) an increase in the demand for home heating oil 26. The price elasticity of demand is a measure of A) the equilibrium price of a product. B) buyers' responsiveness to changes in the price of a product. C) the amount of a product purchased when income increases D) whether a product is a substitute or a complement E) how much a change in demand affects the equilibrium price.

Explanation / Answer

24) The law of supply states that other things remaining the same, if there is a increase in price of a product, there will be an increase in the quantity supplied of that product and vice versa.

Correct Answer: Option C)

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25) In case of substitute goods, if the price of a good increases, the quantity demanded of the substitute good increases. Let us say, X and Y are substitute to each other. Thus, if price of X increases the quantity demanded of Y will increase.

Correct Answer: Option E)

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26) Price elasticity of demand is the percentage change in quantity demanded for a per unit percentage change in price. It shows the responsiveness of the buyers demand for a given change in price.

Correct Answer : Option B)

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