Deck 3: Demand

Question 1

A movement along the demand curve may be caused by:

A) A change in income
B) A change in advertising
C) A change in the price of substitutes
D) A change in price

Answer 1

D

Question 2

What would the effect on the demand for product A be, as a result of an increase in the price of a substitute product?

A) An inward shift in the supply curve for A
B) An inward shift of the demand curve for A
C) An outward shift of the demand curve for A
D) A fall in the quantity demanded of product A

Answer 2

C

Question 3

An increase in the price of a product (if demand is downward sloping) will lead to:

A) An increase in quantity demanded
B) An outward shift in demand
C) An outward shift in supply
D) A decrease in quantity demanded

Answer 3

D

Question 4

A decrease in the price of a product (if demand is downward sloping) will lead to:

A) An increase in quantity demanded
B) An outward shift in demand
C) An outward shift in supply
D) A decrease in quantity demanded

Question 5

An increase in a person's income will have what effect on demand for 'inferior goods'

A) An increase in quantity demanded
B) An outward shift in demand
C) An inward shift in demand
D) A decrease in quantity demanded

Question 6

An increase in demand for a normal product might occur because of:

A) A rise in the price of a complement
B) A fall in the price of a substitute
C) An increase in the number of customers
D) An increase in supply

Question 7

For a Veblen good the quantity demanded falls when the price increases.

Question 8

The demand for a product will shift outwards if the price of a complement increases.

Question 9

The extra satisfaction from consuming another unit of a product is called the ________ _______.

Question 10

If two products are substitutes a decrease in price of one will:

A) Lead to a movement along the demand curve of the other.
B) Reduce supply of the other.
C) Shift demand for the other inwards.
D) Shift demand for the other outwards.

Question 11

An inferior good is one for which:

A) Quantity demanded will fall if price falls.
B) Demand falls when income falls.
C) Quantity demanded rises when price rises.
D) Demand falls when income increases.

Question 12

The level of effective demand for a product does not depend on:

A) Customer incomes
B) The cost of inputs
C) The price of competitor's products
D) The number of substitutes within the market

Question 13

During a recession, customers tend to:

A) Increase their effective demand for goods and services.
B) Increase their expenditure on goods and services.
C) Decrease their effective demand for goods and services.
D) None of the above.

Question 14

Diminishing marginal utility leads to the demand curve generally being:

A) Vertical
B) Upward sloping
C) Horizontal
D) Downward sloping

Question 15

The divergence between marginal and total utility may be described by:

A) The utility paradox
B) The paradox of value
C) Utility divergence
D) Value divergence

Question 16

The marginal utility derived from consuming water is ____ and the total utility derived from consuming water is ______.

A) Low, low
B) High, high
C) Low, high
D) High, low

Question 17

Relative to water, the marginal utility derived from diamonds is:

A) High
B) Low
C) No different
D) None of the above

Question 18

When consuming a large meal in a buffet restaurant, marginal utility:

A) Will always be positive.
B) May become negative.
C) Will always be increasing.
D) None of the above.

Question 19

Utility is maximised when:

A) Total utility is as large as possible.
B) Total utility is zero.
C) Marginal utility is zero.
D) Marginal utility = total utility.

Question 20

If the quantity demanded for a good is given by the equation Qd = 100 - 4P, if the price is £10, then the quantity demanded is:

A) 96
B) 60
C) 40
D) 2.5

Question 21

What is the price if the quantity demanded is 96 units given the demand curve is given by the equation Qd = 100 - 2P

A) 4
B) 2
C) 1
D) 0.5

Question 22

When consumers switch to cheaper alternative products this is known as:

A) The income effect
B) The Giffen effect
C) The derived effect
D) The substitution effect

Question 23

An increase in income is unlikely to substantially increase the demand for:

A) Holidays
B) Milk
C) Days out
D) Meals in restaurants

Question 24

Marketing campaigns are designed to:

A) Cause a movement along the demand curve.
B) Shift the demand curve for a good to the left.
C) Cause a movement along the supply curve.
D) Shift the demand curve for a good to the right.

Question 25

Which of the two goods below represent complementary goods?

A) Cake and biscuits
B) Hot chocolate and coffee
C) Tea and coffee
D) Tea and biscuits

Question 26

Which of the following represent substitute goods?

A) Strawberries and cream
B) Strawberries and raspberries
C) Apple pie and custard
D) Jelly and ice cream

Question 27

Goods which experience a fall in the quantity demanded following a fall in price are known as:

A) Veblen goods
B) Normal goods
C) Inferior goods
D) Luxury goods

Question 28

A contraction of demand is associated with:

A) An increase in the quantity demanded
B) A fall in the quantity demanded
C) An inward shift of the demand curve
D) An outward shift of the demand curve

Question 29

A hot summer is likely to cause:

A) A movement along the demand curve for sun tan lotion
B) An outward shift of the demand curve for sun tan lotion
C) An inward shift of the demand curve for sun tan lotion
D) None of the above