Question 1

The price of a new textbook increases from $75 to $90 while the price of used copies of the textbook increases from $50 to $65. Other things equal, we would expect to observe

Accepted Answer

This is because the price of both new and used textbooks has increased, which is likely to cause consumers to look for cheaper alternatives. As a result, the demand for used textbooks is likely to decrease and the demand for new textbooks (which are now relatively cheaper) is likely to increase. Therefore, the quantity demanded of used textbooks is expected to decrease while the quantity demanded of new textbooks is expected to increase.

Question 2

Which of the following best represents the law of demand?

Accepted Answer

The law of demand states that there is an inverse relationship between the price of a good and the quantity demanded of that good. As the price of the good increases, the quantity demanded of that good decreases. Therefore, choice B best represents the law of demand. Choices A and D are partially correct, as a decrease in price can lead to an increase in demand, but they do not represent the full concept of the law of demand. Choice C represents the opposite concept, known as the law of supply.

Question 3

Which of the following is an example of the law of demand?

Accepted Answer

The answer of Which of the following is an example...

Question 4

In economics, the meaning of demand refers to

Accepted Answer

Demand refers to the quantities of a good that people will buy at various prices. It represents the willingness of consumers to purchase a good or service at different prices, and is reflected by the quantity demanded at each price point.

Question 5

According to the law of demand, the quantity demanded of a good is related to

Accepted Answer

The law of demand states that the quantity demanded of a good is inversely related to the price of that good, ceteris paribus. This means that as the price of a good increases, the quantity demanded of that good decreases, and vice versa. Therefore, the correct answer is D, the relative price of that good. The other choices (A, B, and C) are not directly related to the law of demand.

Question 6

Demand applies to which of the following?

Accepted Answer

Demand applies to all of the listed options because it refers to the desire and willingness of consumers to purchase goods and services.

Question 7

Which one of the following statements is FALSE?

Accepted Answer

While price is certainly an important factor for consumers, it is not always the only or even the most important factor. Consumers also consider factors such as quality, brand reputation, convenience, and availability when making purchasing decisions.

Question 8

A schedule of amounts of a good that people will purchase at various prices during a specific time period holding other factors constant is

Accepted Answer

This is a description of demand, as it shows the quantity demanded at different prices while holding other variables like income and tastes constant.

Question 9

The price of a new textbook is $60 in one year and $75 two years later, while the price of a used copy of the textbook increased from $25 to $37.50. The relative price of a new textbook

Accepted Answer

To calculate the relative price of a new textbook, we divide the price of a new textbook by the price of a used textbook.

One year ago, the relative price of a new textbook was $60/$25 = 2.4. 
Two years ago, the relative price of a new textbook was $75/$37.50 = 2.0.

Therefore, the relative price of a new textbook decreased from 2.4 to 2.0.

Question 10

According to the law of demand

Accepted Answer

The law of demand states that as the price of a good or service increases, the quantity demanded of that good or service decreases, and conversely, as the price of a good or service decreases, the quantity demanded of that good or service increases. Therefore, price and quantity demanded move in opposite directions.

Question 11

Demand is a schedule of

Accepted Answer

Demand is a schedule of how much of a good people will purchase at each different possible price. It shows the quantity demanded at each price point, indicating the relationship between price and quantity demanded. While A, C, and D may be related to demand in some way, they do not fully capture the concept of demand as a schedule of quantity demanded at different prices.

Question 12

Other things being equal, an increase in the price of a good leads to a decrease in the amount people purchase. This is known as

Accepted Answer

The statement describes the law of demand, which states that as the price of a good increases, the quantity demanded decreases, assuming all other factors remain constant (ceteris paribus). This is a fundamental concept in economics.

Question 13

When the term "price" is used in the law of demand, price refers to

Accepted Answer

The answer of When the term "price" is used in...

Question 14

The arrangements that individuals have with each other to exchange goods is known as

Accepted Answer

The definition provided in the question best describes a market, which is where individuals come together to exchange goods and services. Demand refers to the willingness and ability of consumers to purchase goods or services, while supply refers to the willingness and ability of producers to provide goods or services. Complements are goods or services that are often used together, such as milk and cereal, but do not encompass the broader concept of arrangements for exchanging goods.

Question 15

Which of the following illustrates the law of demand?

Accepted Answer

The law of demand states that as the price of a good increases, the quantity demanded decreases. Choice C reflects this relationship by showing that as the availability of federal tuition grants increases (essentially lowering the price of college education), college enrollment also increases.

Question 16

Markets are

Accepted Answer

Markets are systems in which the prices of goods and services are determined by the interplay of supply and demand. They are not necessarily physical locations, and while consumers may be able to inspect goods and services in some markets, this is not a defining characteristic of markets. Additionally, while economists may use market models to understand consumer behavior and preferences, markets themselves are not purely hypothetical constructs.

Question 17

According to the law of demand,

Accepted Answer

The law of demand states that there is an inverse relationship between the price of a good and the quantity demanded of that good, all else equal. This means that as the price of a good increases, the quantity demanded of that good will decrease, and vice versa. Therefore, people will buy more of a good when the price falls, as stated in choice D.

Question 18

John believes that when the price of a good increases people will purchase more of the good. This statement is

Accepted Answer

John's belief is inconsistent with the law of demand, which states that as the price of a good increases, the quantity demanded of the good will decrease. Therefore, his belief that people will purchase more of a good when the price increases is incorrect.

Question 19

The price of a new textbook increased from $60 to $75 in one year, while the price of a used textbook increased by 25 percent. What happened to the relative price of a used textbook?

Accepted Answer

The answer of The price of a new textbook increased...

Question 20

Market demand is

Accepted Answer

Market demand refers to the total quantity demanded by all consumers in a market at a particular price. It represents the sum of the demand curves of all individual consumers in the market.

Quiz 3: Demand and Supply