Question 1

Figure 3-1 -Refer to Figure 3-1.An increase in population would be represented by a movement from A)A to B. B)B to A. C)D₁ to D₂. D)D₂to D₁.

Accepted Answer

C

Question 2

The market for smart phones has grown rapidly over the past few years,due in part to the overwhelming success of the Apple iPhone.Following the successful launch of the iPhone in 2007,companies such as Samsung,HTC,and LG have all introduced products to compete with the iPhone.The smart phones introduced to compete with the iPhone would be considered
A)complements to the iPhone.
B)substitutes for the iPhone.
C)inferior goods compared to the iPhone.
D)normal goods compared to the iPhone.

Accepted Answer

The introduction of smart phones by other companies to compete with the iPhone indicates that these products are substitutes for the iPhone. A substitute is a product that can be used instead of another product to satisfy similar needs or wants.

Question 3

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

Accepted Answer

If the demand curve shifts to the left, it means that at any given price, the quantity demanded has decreased. This could be due to factors such as a decrease in consumer income, a decrease in consumer preference for the good, or the availability of a substitute good that is more desirable.

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, indicating that at any given price, consumers are willing and able to buy more of the product. An increase in quantity demanded, on the other hand, refers to a movement along a given demand curve, showing that as the price of the product falls, consumers are willing and able to purchase a greater quantity of the product.

Question 5

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 occurs as a result of a change in the price of the product itself. Therefore, a change in the price of toothpaste would cause a movement along the demand curve for toothpaste. Changes in price of other goods (such as toothbrushes), consumer income, or population could cause shifts in the demand curve for toothpaste, but not a movement along the curve.

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

The demand curve has price on the vertical axis and quantity on the horizontal axis, indicating that price is the most important determinant of the demand for the good. As price increases, people tend to demand less of the good, and vice versa.

Question 7

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 result in a decrease in the quantity of MP3 players demanded because as the price of a product increases, consumers tend to buy less of that product. This is known as the law of demand. The supply of MP3 players is unlikely to increase in response to a price increase, as suppliers may be hesitant to produce more if they anticipate a decrease in demand. Therefore, choice D is the best answer.

Question 8

If the Apple iPhone and the Samsung Galaxy are considered substitutes,then,other things equal,an increase in the price of the iPhone will
A)decrease the demand for the iPhone.
B)increase the demand for the Galaxy.
C)increase the quantity demanded for the Galaxy.
D)increase the quantity demanded for the iPhone.

Accepted Answer

If the price of the iPhone increases, consumers may shift to the substitute, which is the Samsung Galaxy, increasing its demand. Therefore, an increase in the price of the iPhone will increase the demand for the Galaxy.

Question 9

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 of a price change refers to how a change in the price of a good affects a consumer's purchasing power. If the price of a good increases, the consumer's purchasing power decreases (assuming income and other factors remain constant), which will likely lead to a decrease in the quantity demanded of that good. Similarly, if the price of a good decreases, the consumer's purchasing power increases, which will likely lead to an increase in the quantity demanded of that good. This phenomenon is known as the income effect because it reflects how changes in price impact a consumer's income (or purchasing power) and, in turn, their behavior as a consumer.

Question 10

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 as the increase in income leads to an increase in demand for it. This is because as people's income increases, they have more disposable income to spend on luxury items, such as peanut butter.

Question 11

When the price of a 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

When the price of a good falls, consumers would be incentivized to buy more of that good as it will become cheaper relative to other goods. This is known as the substitution effect. At the same time, since the price of the good has fallen, consumers would also experience an increase in their purchasing power or income, which would allow them to buy more of that good as well. This is known as the income effect. Therefore, both the substitution and income effects would lead to an increase in the quantity demanded of the good.

Question 12

If,in response to an increase in the price of chocolate,the quantity of chocolate demanded 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

A decrease in the price of chocolate would result in a decrease in the quantity demanded, as people would be less willing to buy as much chocolate at a higher price. This decrease in quantity demanded is a movement along the demand curve, while a decrease in demand would shift the entire demand curve to the left, resulting in a lower quantity demanded at every price level. Changes in consumer income or taste would also shift the demand curve, rather than resulting in a movement along it.

Question 13

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 a demand curve shifts to the right, it means that at all price points, consumers are willing to buy a larger quantity of the good or service. This is an increase in demand, as opposed to an increase in quantity demanded which would only occur when the price of the good or service changes. Therefore, choice A is the correct answer.

Question 14

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

The market demand for a product is determined by various factors such as population and demographics, income, tastes, and the price of the product. However, a change only in the price of the product will not change the market demand for the product, but it will result in a movement along the demand curve.

Question 15

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 represents the total demand for a good or service by all consumers in a particular market. It is the sum of all individual demands for the good or service.

Question 16

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 predicts that as the price of grapefruit rises, consumers will switch to substitutes, such as oranges. This will decrease the quantity demanded of grapefruit, but it does not necessarily mean that the demand for grapefruit will decrease overall. The demand curve will shift if there is a change in any other factor that affects demand (e.g. income, tastes, etc.). The other choices are incorrect because they do not reflect the substitution effect.

Question 17

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 consumers' purchasing power.
A)ceteris paribus
B)population
C)substitution
D)income

Accepted Answer

The income effect describes how a change in price affects a consumer's purchasing power. When the price of a good increases, the consumer's purchasing power decreases, and so they may purchase less of the good. Conversely, if the price decreases, the consumer's purchasing power increases, and they may purchase more of the good. This effect is particularly important for luxury goods, where consumers may be more sensitive to changes in their purchasing power.

Question 18

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

The answer of Which of the following will shift the...

Question 19

If the price of orchids falls,the substitution effect due to the price change will cause
A)an increase in the demand for orchids.
B)an increase in the demand for roses,a substitute for orchids.
C)an increase in the quantity demanded of orchids.
D)an increase in the quantity supplied of orchids.

Accepted Answer

The substitution effect due to a decrease in the price of orchids would cause consumers to substitute orchids for other goods, leading to an increase in the quantity demanded of orchids. However, it is not enough to cause an increase in demand for orchids as a whole since the price change did not change the overall preferences or tastes of consumers. The decrease in price only changes the quantity demanded, not the demand itself. It also would not lead to an increase in the quantity supplied since the price change is not affecting suppliers' willingness or ability to produce and sell orchids.

Question 20

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 for which demand decreases as the consumer's income increases. In this case, since an increase in income leads to a decrease in demand for popcorn, popcorn is classified as an inferior good.

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

Figure 3-1 -Refer to Figure 3-1.An increase in population would be represented by a movement from

If a demand curve shifts to the left,then

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

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

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.

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

If the Apple iPhone and the Samsung Galaxy are considered substitutes,then,other things equal,an increase in the price of the iPhone will

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

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

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

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

If a demand curve shifts to the right,then

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

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

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

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 consumers' purchasing power.

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

If the price of orchids falls,the substitution effect due to the price change will cause

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