Quiz # 22



#1 If the price of an inferior good falls, its demand-

When price of an inferior good fallsits negative income effect will tend to reduce the quantity purchased, while the substitution effect will tend to increase the quantity purchased. … Thus even in most cases of inferior goods the net result of the fall in price will be increase in its quantity demanded.

#2 All of the goods which are scarce and limited in supply are called-

In economics, goods are materials that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods that are tangible property, and services, which are non-physical.

#3 Who coined the phrase “Tragedy of the commons”?

In 1974 the general public got a graphic illustration of the “tragedy of the commons” in satellite photos of the earth. Pictures of northern Africa showed an irregular dark patch 390 square miles in area. Ground-level investigation revealed a fenced area inside of which there was plenty of grass. Outside, the ground cover had been devastated.

– Garett Hardin

#4 Who determines the price in a Capitalistic Economy?

In a capitalistic society, the production and pricing of goods and services are determined by the free market, or supply and demand, however, some government regulation may occur.

#5 Price mechanism is a feature of-

Role of Price Mechanism in a Capitalist Economy

In a capitalist economy, the prices of all goods and services will be decided by the market forces exclusively, i.e. the demand and supply of goods. In such a scenario price mechanism plays an important role.

January 2, 2020

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