Category: Economics

➤ When does the law of demand not hold?
The law can fail for Giffen goods, where higher prices raise quantity demanded for certain inferior staples due to strong income effects. It also fails for Veblen goods, where higher price signals status. Other exceptions include speculative markets, expectation-driven demand, or highly inelastic necessities with no substitutes.

If the price of a variable input increases, all of the following curves will shift upward except which one?
A. marginal cost
B. average variable cost
C. average fixed cost
D. average total cost

➤ How does disinflation affect consumers and businesses?
Disinflation reduces the pace of price increases, which helps households by preserving purchasing power and easing cost-of-living pressures. For businesses, it can squeeze revenue growth and slow wage rises, but lower input inflation may improve margins. It also shifts expectations and can influence interest rates and investment plans.

52 pointsIn a modern mixed economy, who decides what goods and services will be produced?
C) only the government
B) only consumers
A) only the producers
D) producers, consumers, and government

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