Engineering Board Exam Reviewer · Basic Economic Concepts · easy

Which of the following best describes "necessity" goods in economics?

1. Goods essential for daily living, with demand relatively insensitive to price changes
2. Goods purchased only when income is high
3. Goods with highly elastic demand
4. Goods that substitute for luxury items

Answer

A. Goods essential for daily living, with demand relatively insensitive to price changes

Solution

Necessity goods are essential for daily living, and their demand is relatively insensitive (inelastic) to price changes.

More Basic Economic Concepts questions

1. Which of the following best describes "luxury" goods?
2. According to the law of demand, as the price of a good increases (all else equal), what happens to the quantity demanded?
3. According to the law of supply, as the price of a good increases (all else equal), what happens to the quantity supplied?
4. In a perfectly competitive market, how many buyers and sellers are typically present, and what is their influence on price?
5. A market situation with only one seller and many buyers is called:
6. A market situation with only one buyer and many sellers is called:
7. A market situation with only a few sellers dominating the market is called:

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