Deck 3: Managing Demand

Question 1

If the demand for a product increases when the price falls the demand curve would be ___________ sloping.

Answer 1

downward

Question 2

Demand measures the quantity customers are willing and ______ to purchase

Answer 2

able

Question 3

A combination of high price and high product benefits is called a differentiation strategy by Bowman

Answer 3

True

Question 4

A fall in price leads to an outward shift in a demand curve

Question 5

The price elasticity of demand measures whether demand increases or decreases when the price falls

Question 6

When demand is price inelastic, a price increase will also increase total revenue.

Question 7

An increase in costs mean the demand curve will shifts.

Question 8

An increase in demand is shown by a movement along the demand curve.

Question 9

A shift in the demand curve may occur for all of the following except a change in

A) price
B) income
C) The price of complements
D) The price of substitutes

Question 10

Complete the sentence. The demand curve will shift inwards if…

A) Supply falls.
B) The good is inferior and income rises.
C) The price rises.
D) The good is normal and an income increases.

Question 11

What does it tell you if the income elasticity for your product is -0.5?

A) The product is inferior and an increase in income by 10% reduces demand by 5%.
B) The product is inferior and an increase in income by 10% increases demand by 50%.
C) The product is normal and an increase in income by 10% reduces demand by 5%.
D) The product is normal and an increase in income by 10% increases demand by 50%.

Question 12

What does it tell you if the cross price elasticity of demand between two products is +2?

A) The products are substitutes and a price increase in one by 3% decreases demand for the other by 1.5%.
B) The products are complements and a price increase in one by 3% decreases demand for the other by 1.5%.
C) The products are complements and a price increase in one by 3% decreases demand for the other by 6%.
D) The products are substitutes and a price increase in one by 3% increases demand for the other by 6%.

Question 13

What does a demand curve show?

A) What people are willing and able to buy at each income, all other things unchanged.
B) What people are willing and able to buy at each and every price, all other things unchanged.
C) What people like, all other things unchanged.
D) What people can afford, all other things unchanged.

Question 14

What does it tell you if demand is price elastic?

A) A price decrease increases revenue.
B) The percentage change in quantity demand is less than the change in price.
C) The value of price elasticity is less than 1.
D) There are likely to be few substitutes.

Question 15

What can cause a change in quantity demanded?

A) A change in income.
B) A change in price.
C) A change in advertising.
D) A change in the number of buyers.

Question 16

When might a demand curve for a normal good shift outwards?

A) When the price of the product falls.
B) When income falls.
C) When the price of a complement falls.
D) When supply increases.

Question 17

What does it tell you if demand is price inelastic?

A) The change in quantity demanded is less than the price change in percentages.
B) Demand does not change when price changes.
C) Revenue falls when price increases.
D) There are many producers.

Question 18

If the demand for a product increases when the price of another one rises they are known as ___________.