Question 1

The tendency for quantity demanded to be higher when the price is lower is known as the law of:

Accepted Answer

The law of demand states that there is an inverse relationship between price and quantity demanded. As the price of a good or service increases, the quantity demanded decreases and vice versa. This is a fundamental principle in economics and is the basis for understanding how changes in prices affect consumer behavior.

Question 2

A _____ illustrates a downward sloping relationship between price and quantity.

Accepted Answer

A demand curve shows the relationship between the price of a good or service and the quantity that consumers are willing and able to buy at that price. The law of demand states that as price increases, quantity demanded decreases, resulting in a downward sloping curve.

Question 3

The law of demand implies that you will:

Accepted Answer

The law of demand states that as the price of a good or service decreases, the quantity demanded of that good or service will increase, and vice versa. Therefore, consumers will buy more at lower prices, which is option B.

Question 4

Suppose that apples and pomegranates are substitute goods. The _____ pomegranates will increase when apple prices rise.

Accepted Answer

When the price of apples rise, consumers will look for substitutes and shift towards buying pomegranates. This will increase the demand for pomegranates. Therefore, the correct option is A) demand for.

Question 5

In much of the country, car owners choose to operate their vehicles using gasoline or electricity, both of which are normal goods. Which factor would cause an increase in the demand for gasoline?

Accepted Answer

An increase in consumer incomes would cause a shift in the demand curve to the right, indicating an increase in the quantity of gasoline demanded. As people have more money, they may be more likely to purchase and operate cars, increasing the demand for gasoline.

Question 6

In general, when incomes rise, individuals are more likely to travel by air than by car when they take vacations. Which statement provides one possible explanation for this phenomenon?

Accepted Answer

When incomes rise, individuals tend to view travel by car as an inferior good, meaning that as their income increases, they are less likely to use travel by car as a means of transportation. On the other hand, air travel is viewed as a normal good, meaning that as their income increases, individuals are more likely to use air travel for their vacations. This can be due to the perception that air travel is faster, more comfortable, and more convenient than travel by car.

Question 7

A shift of the demand curve for fried chicken would NOT be caused by a change in:

Accepted Answer

According to the law of demand, as the price of a good decreases, the quantity demanded of that good increases, and vice versa. Therefore, a change in the price of fried chicken would result in a movement along the demand curve, rather than a shift of the entire curve. Changes in income, the price of complementary goods (such as hot dogs), and the popularity of fried chicken could all potentially cause a shift in the demand curve.

Question 8

If ratatouille and Hungarian goulash are substitutes, a decrease in the price of Hungarian goulash will cause the demand for:

Accepted Answer

When the price of a substitute good (Hungarian goulash) decreases, consumers will switch to the cheaper option, leading to a decrease in the demand for the other substitute (ratatouille).

Question 9

Paint and paintbrushes are complements. A decrease in the price of paintbrushes will cause the demand for:

Accepted Answer

Paint and paintbrushes are complements, meaning they are typically used together. If the price of paintbrushes decreases, consumers are more likely to purchase them, which will in turn increase the demand for paint, as more paintbrushes will be used to apply the paint. Therefore, the demand for paint will increase.

Question 10

Which factor will NOT cause an increase in the demand for shoes?

Accepted Answer

A decrease in the price of shoes affects the quantity demanded, not the demand itself. Demand refers to the desire and ability to purchase goods at various prices, while quantity demanded refers to the specific amount of goods desired at a specific price. Changes in price result in movements along the demand curve, not shifts of the demand curve.

Question 11

If people demand fewer Netflix subscriptions when the price of Hulu subscriptions falls, then Netflix and Hulu are:

Accepted Answer

Netflix and Hulu are substitutes because they are competing for the same market share of streaming video subscriptions. When the price of Hulu falls, consumers will be more likely to choose Hulu over Netflix, leading to a decrease in demand for Netflix subscriptions.

Question 12

If the demand for electric cars falls when the price of electricity rises, then electric cars and electricity are:

Accepted Answer

Electric cars and electricity are complements because the demand for electric cars decreases when the price of electricity, which is needed to power them, increases. This indicates that they are used together, and an increase in the price of one leads to a decrease in the demand for the other.

Question 13

If chicken and pork are substitutes, then a fall in the price of chicken will cause:

Accepted Answer

When two goods are substitutes, a decrease in the price of one good will cause a decrease in the demand for the other good. Therefore, a fall in the price of chicken will cause a decrease in the demand for pork.

Question 14

For vacations, restaurant meals, and smartphones, purchases tend to fall as buyers' incomes fall and rise as buyers' incomes rise. Such goods are known as:

Accepted Answer

Normal goods are those for which demand increases as the income of buyers increases and decreases as the income of buyers decreases. Vacations, restaurant meals, and smartphones are examples of normal goods because people tend to buy more of these items when they have higher incomes.

Question 15

For bus rides, a(n) _____ in buyers' incomes causes a(n) _____.

Accepted Answer

Bus rides are typically considered an inferior good, meaning that as buyers' incomes increase, the demand for bus rides decreases.

Question 16

Steak is a normal good. If students' incomes at your college decrease, the effect on steak consumption will be:

Accepted Answer

A decrease in income would lead students to have less money to spend on luxury items like steak. As a result, they will be less likely to buy steak, leading to a decrease in demand.

Question 17

Suppose that, upon changing jobs, you experience an increase in income (otherwise, why change jobs?). If, as a result, you decide to purchase more sushi and fewer hamburgers, then hamburgers for you are a(n) _____ good.

Accepted Answer

Hamburgers are considered an inferior good in this scenario because as your income increases, you buy fewer hamburgers and more of a higher-quality or more expensive alternative (sushi), indicating that you view hamburgers as a less desirable option when you have more money to spend.

Question 18

The demand for bottled water decreases at a time when people believe bottled water prices will soon fall. The change in demand is most likely attributable to a change in:

Accepted Answer

The decrease in demand for bottled water is due to a change in consumer expectations that the prices of bottled water will soon fall. This suggests that consumers are anticipating future changes in price and adjusting their buying behavior accordingly, which is a change in consumer expectations.

Question 19

The demand curve for meals at a local Chick-fil-A will shift to the left if:

Accepted Answer

The answer of The demand curve for meals at a...

Question 20

If the price of peanut butter were to decrease, the demand for jam, a complementary good, would probably _____.

Accepted Answer

When the price of a complementary good (peanut butter) decreases, the demand for the other complementary good (jam) is likely to increase since a decrease in the price of one good makes it more affordable and desirable, thereby increasing the demand for the complementary good.

Quiz 2: Demand: Thinking Like a Buyer