Question 1

A movement along the demand curve for toothpaste would be caused by
A)a change in the price of toothbrushes.
B)a change in consumer income.
C)a change in the price of toothpaste.
D)a change in population.

Accepted Answer

A movement along the demand curve for toothpaste would only be caused by a change in the price of toothpaste itself. This is because movements along the demand curve are only caused by changes in the quantity demanded due to a change in the price of the good being analyzed. Any other factors, such as changes in consumer income, the price of related goods, or population, would cause a shift in the demand curve, not a movement along it.

Question 2

The demand by all the consumers of a given good or service is the ________ for the good or service.
A)market demand
B)quantity demanded
C)law of demand
D)scheduled demand

Accepted Answer

Market demand refers to the total quantity of a good or service that all consumers in a market are willing and able to buy at a given price. It represents the sum of individual demands for the good or service.

Question 3

The income effect of a price change refers to the impact of a change in
A)income on the price of a good.
B)demand when income changes.
C)the quantity demanded when income changes.
D)the price of a good on a consumer's purchasing power.

Accepted Answer

The income effect refers to the impact of a change in the price of a good on a consumer's purchasing power. When the price of a good decreases, the consumer's purchasing power increases, which can lead to an increase in the quantity demanded. When the price of a good increases, the consumer's purchasing power decreases, which can lead to a decrease in the quantity demanded.

Question 4

What is the difference between an "increase in demand" and an "increase in quantity demanded"?
A)There is no difference between the two terms; they both refer to a shift of the demand curve.
B)An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.
C)There is no difference between the two terms; they both refer to a movement downward along a given demand curve.
D)An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve.

Accepted Answer

An "increase in demand" refers to a shift of the entire demand curve to the right, meaning that at each possible price level, consumers are willing and able to buy more of the good. An "increase in quantity demanded" refers to a movement along the existing demand curve, which occurs when the price of the good itself changes and consumers respond by buying more or less of it.

Question 5

Following the successful launch of Red Bull in the Canadian market in 2004, companies such as Coca Cola, Pepsi, and many others have introduced products to compete with Red Bull.The energy drinks introduced to compete with Red Bull would be considered
A)complements to Red Bull.
B)substitutes for Red Bull.
C)inferior goods compared to Red Bull.
D)normal goods compared to Red Bull.

Accepted Answer

Energy drinks introduced to compete with Red Bull would be considered substitutes for Red Bull, as they serve a similar purpose and consumers may choose one over the other based on price, taste, or brand loyalty. Complements would be products that are typically consumed together with Red Bull, such as snacks or mixers, while inferior or normal goods refer to different categories of goods based on how consumers respond to changes in income.

Question 6

By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.
A)quantity; price; quantity
B)price; quantity; quantity
C)price; quantity; price
D)quantity; price; price

Accepted Answer

Economists assume that the most important determinant of the demand for a good is its price, which is why it is placed on the vertical axis. Quantity, the other variable in demand, is placed on the horizontal axis. Therefore, choice C is the most appropriate one.

Question 7

If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as
A)a decrease in demand.
B)a decrease in quantity demanded.
C)a change in consumer income.
D)a decrease in consumers' taste for chocolate.

Accepted Answer

When there is an increase in the price of chocolate, it affects only the quantity demanded of chocolate and not the entire demand curve. Hence, this situation can be described as a decrease in the quantity demanded of chocolate, which is option B.

Question 8

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is
A)an inferior good.
B)a neutral good.
C)a necessity.
D)a normal good.

Accepted Answer

An inferior good is a good that people demand less of as their income increases. Popcorn is often considered an inferior good because as people's income rises, they may choose to consume higher-priced snacks or meals instead of popcorn. Therefore, if an increase in income leads to a decrease in the demand for popcorn, it must be an inferior good.

Question 9

Table 3.1 
-Refer to Table 3.1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia )and the rest of the market.At a price of $5, the quantity demanded in the market would be
A)51 kgs.
B)63 kgs.
C)76 kgs
D)146 kgs.

Accepted Answer

The answer of Table 3.1 
-Refer to Table 3.1.The table...

Question 10

If the price of grapefruit rises, the substitution effect due to the price change will cause
A)a decrease in the demand for grapefruit.
B)a decrease in the demand for oranges, a substitute for grapefruit.
C)a decrease in the quantity demanded of grapefruit.
D)a decrease in the quantity supplied of grapefruit.

Accepted Answer

The substitution effect of a price increase in grapefruit would cause consumers to switch to alternative fruits, such as oranges, which would decrease the quantity demanded of grapefruit. However, it does not necessarily mean that the demand for grapefruit will decrease overall, as there could be other factors affecting demand such as changes in consumer tastes or income. Similarly, it would not affect the quantity supplied of grapefruit, as that would depend on the willingness and ability of producers to supply it at the higher price.

Question 11

A change in all of the following variables will change the market demand for a product except
A)the price of the product.
B)population and demographics.
C)income.
D)tastes.

Accepted Answer

All of the other variables (population and demographics, income, and tastes) can affect the overall demand for a product. However, the price of the product is not a determinant of demand, but rather a result of supply and demand interactions.

Question 12

Which of the following will shift the demand curve for a good?
A)a change in the technology used to produce the good
B)an increase in the price of the good
C)a decrease in the price of a complementary good
D)a decrease in the price of the good

Accepted Answer

A change in the price of a complementary good affects the demand for another good. For example, if the price of coffee decreases, the demand for coffee filters might increase, shifting the demand curve for coffee filters to the right. Changes in technology or the price of the good itself affect the supply curve or move along the demand curve, respectively, rather than shifting the demand curve.

Question 13

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is
A)a neutral good.
B)a normal good.
C)a necessity.
D)a complement.

Accepted Answer

Peanut butter is a normal good because as income increases, people are willing and able to buy more of it. This is in contrast to a neutral good, which would not be affected by changes in income, a necessity which people would continue to buy regardless of their income level, or a complement which is a good that is commonly consumed simultaneously with another good.

Question 14

Holding everything else constant, an increase in the price of MP3 players will result in
A)a decrease in the quantity of MP3 players supplied.
B)a decrease in the demand for MP3 players.
C)an increase in the supply of MP3 players.
D)a decrease in the quantity of MP3 players demanded.

Accepted Answer

An increase in the price of MP3 players will lead to a decrease in the quantity of MP3 players demanded, as consumers will be less willing to purchase them at a higher price. This is a movement along the demand curve, not a shift in the curve. Therefore, the correct option is D, which states a decrease in the quantity of MP3 players demanded.

Question 15

When the price of a normal good falls, consumers buy a larger quantity because of the ________ effect and the ________ effect.
A)substitution; income
B)normal; inferior
C)substitute; complement
D)supply; demand

Accepted Answer

The substitution effect occurs when consumers switch to purchasing the cheaper good instead of the more expensive alternatives. The income effect occurs when the lower price increases the purchasing power of consumers' income, allowing them to buy more of the good. Together, these effects lead to an increase in the quantity demanded of a normal good when its price falls.

Question 16

If a demand curve shifts to the right, then
A)demand has increased.
B)quantity demanded has increased.
C)demand has decreased.
D)quantity demanded has decreased.

Accepted Answer

When the demand curve shifts to the right, it means that at any given price, consumers are willing to purchase a higher quantity of the good or service. This corresponds to an increase in demand, rather than a change in quantity demanded.

Question 17

The law of demand implies, holding everything else constant, that
A)as the price of bagels increases, the quantity of bagels demanded will decrease.
B)as the price of bagels increases, the demand for bagels will decrease.
C)as the price of bagels increases, the quantity of bagels demanded will increase.
D)as the price of bagels increases, the demand for bagels will increase.

Accepted Answer

The law of demand states that there is an inverse relationship between the price of a good and the quantity demanded, holding everything else constant. This means that as the price of bagels increases (holding everything else constant), the quantity of bagels demanded will decrease. Therefore, choice A is the correct answer.

Question 18

The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.
A)ceteris paribus
B)population
C)substitution
D)income

Accepted Answer

The income effect shows the change in demand for a good due to the change in the consumer's income caused by the change in the price of the good. When a good's price increases, the consumer's income decreases leading to lower purchasing power, which results in decreased demand for the good. Similarly, when the price of a good reduces, the consumer's income increases leading to higher purchasing power, which results in increased demand for the good.

Question 19

Table 3.1 
-Refer to Table 3.1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia )and the rest of the market.If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would
A)decrease by 32 kgs.
B)increase by 64 kgs.
C)increase by 32 kgs.
D)decrease by 64 kgs.

Accepted Answer

At $3, the total demand is Sunil (12) + Mia (18) + Rest of Market (120) = 150 kgs. At $4, the total demand is Sunil (8) + Mia (14) + Rest of Market (96) = 118 kgs. The difference is 150 - 118 = 32 kgs, indicating a decrease in demand.

Question 20

If Red Bull and Beaver Buzz Energy are considered substitutes, then, other things equal, an increase in the price of the Red Bull will
A)decrease the demand for the Red Bull.
B)increase the demand for the Beaver Buzz Energy.
C)increase the quantity demanded for Beaver Buzz Energy.
D)increase the quantity demanded for the Red Bull.

Accepted Answer

When two products are considered substitutes, an increase in the price of one product (Red Bull) will lead to consumers shifting to the other product (Beaver Buzz Energy) as a replacement. This means that the demand for the Red Bull will decrease, while the demand for the Beaver Buzz Energy will increase. However, it's important to note that this increase in demand for the Beaver Buzz Energy will only be in the short run. In the long run, consumers may adjust their habits and preferences to find other substitutes, leading to a permanent decrease in demand for Red Bull.

Quiz 3: Where Prices Come From: The Interaction of Supply and Demand

A movement along the demand curve for toothpaste would be caused by

The demand by all the consumers of a given good or service is the ________ for the good or service.

The income effect of a price change refers to the impact of a change in

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

Following the successful launch of Red Bull in the Canadian market in 2004, companies such as Coca Cola, Pepsi, and many others have introduced products to compete with Red Bull.The energy drinks introduced to compete with Red Bull would be considered

By drawing a demand curve with on the vertical axis and on the horizontal axis, economists assume that the most important determinant of the demand for a good is the of the good.

If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as

If an increase in income leads to a decrease in the demand for popcorn, then popcorn is

Table 3.1 -Refer to Table 3.1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia ) and the rest of the market.At a price of $5, the quantity demanded in the market would be

If the price of grapefruit rises, the substitution effect due to the price change will cause

A change in all of the following variables will change the market demand for a product except

Which of the following will shift the demand curve for a good?

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is

Holding everything else constant, an increase in the price of MP3 players will result in

When the price of a normal good falls, consumers buy a larger quantity because of the effect and the effect.

If a demand curve shifts to the right, then

The law of demand implies, holding everything else constant, that

The ________ effect refers to the change in quantity demanded for a good that results from the effect of a change in the good's price on consumer's purchasing power.

Table 3.1 -Refer to Table 3.1.The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia ) and the rest of the market.If the price of loose-leaf tea rises from $3 to $4, the market quantity demanded would

If Red Bull and Beaver Buzz Energy are considered substitutes, then, other things equal, an increase in the price of the Red Bull will