Question 1

Sue's Shoe Shop is having a sale on shoes. The first pair of shoes is full price, the second is 25 percent off, and the third is 50 percent off. Describe how this sale relates to individual demand and marginal utility.

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Question 2

Differentiate between a normal good and an inferior good.

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Question 3

Describe and give a reason for the law of supply.

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Question 4

The following are explanations of the Law of Demand, except

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The Law of Demand explains that as the price of a good or service increases, the quantity demanded of that good or service will decrease, ceteris paribus. The other choices (B, C, D) are factors that contribute to the Law of Demand. Diminishing marginal utility means that as a person consumes more of a good or service, the satisfaction they derive from each additional unit will decrease. This can cause them to demand less of the good or service at higher prices. Income effect refers to the fact that as the price of a good or service increases, the purchasing power of a consumer's income decreases, causing them to demand less of the good or service. Substitution effect explains that as the price of a good or service increases, consumers may switch to similar, lower-priced alternatives, causing a decrease in demand for the original good or service.

Question 5

In understanding and analyzing "demand," we focus on how much of a product the buyers are

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In understanding and analyzing "demand," it is important to consider both willingness and ability. Therefore, the best choice is D - "willing and able to buy." The buyers must have both the desire and the financial means to purchase the product in order for it to be considered part of the demand.

Question 6

Surge prices

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Surge pricing is used to balance supply and demand by increasing prices during times of high demand, encouraging more drivers to offer rides and thus increasing the supply to meet the anticipated higher demand.

Question 7

List five determinants of market demand that could cause demand to increase.

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Question 8

Give three explanations for the law of demand.

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Question 9

List five determinants of market demand that could cause demand to decrease.

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Question 10

What is the difference between a change in supply and a change in quantity supplied?

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Question 11

What is meant by the rationing function of prices?

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Question 12

A primary advantage of Uber to government-regulated taxis is that

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Uber's dynamic pricing model adjusts fares in real-time based on demand and supply conditions, avoiding the inefficiencies of fixed, regulated taxi fares. This flexibility can lead to more efficient matching of drivers with passengers and potentially lower wait times for riders.

Question 13

What is the difference between a change in demand and a change in quantity demanded?

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Question 14

Suppose that salsa manufacturers sell 2 million bottles at $3.50 in one year and 3 million bottles at $3 in the next year. Based on this information, we can conclude that the

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Question 15

Describe in words how one can recognize the market equilibrium point in a graph of a demand schedule and a supply schedule.

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Question 16

List six determinants of market supply.

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Question 17

State the law of demand, and explain why the other-things-equal assumption is critical to it.

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Question 18

Define supply.

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Question 19

Suppose the U.S. Congress is considering passing an excise tax that would increase the price of a pack of cigarettes by $1.00. What would be the likely effect of this change on the demand and supply of cigarettes? What is likely to happen to cigarette prices and the quantity consumed if the tax bill is enacted?

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Question 20

Which of the following is consistent with the law of demand?

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Law of demand states that as the price of a product increases, the quantity demanded of that product will decrease, and as the price of the product decreases, the quantity demanded of that product will increase. Option C shows an increase in the price of hamburgers, which leads to a decrease in the quantity demanded, thus consistent with the law of demand. Option A is incorrect because a decrease in the price of a product generally leads to sellers wanting to sell more, not less. Option B is incorrect because an increase in people's craving for a product does not necessarily mean they will buy more of that product - it depends on the price. Option D is incorrect because a decrease in the price of a product generally leads to an increase in the quantity demanded, as is stated in the law of demand.

Quiz 3: Demand, Supply, and Market Equilibrium