Question 1

If the demand for a good increases when people's incomes increase,

Accepted Answer

When the demand for a good increases when people's incomes increase, it indicates that the good is a normal good. This is because as people's incomes increase, they have more purchasing power and are willing to buy more of the normal goods they already consume. An inferior good, on the other hand, is a good for which demand decreases when people's incomes increase. The law of demand states that as the price of a good increases, the quantity demanded decreases, which is not relevant to this scenario. The demand curve for a good can slope upward or downward, depending on various factors such as availability of substitutes and complementary goods.

Question 2

A huge 50 percent off sale on golf clubs is advertised for next week.What happens this week in the market for golf clubs?

Accepted Answer

The demand for golf clubs decreases this week because consumers will wait for the sale next week to purchase golf clubs at a lower price.

Question 3

In a recession,consumers have less income to spend.As a result,if dining out is a normal good,then which of the following would happen to the demand curve for dining out?

Accepted Answer

In a recession, consumers have less income to spend, which leads to a decrease in demand for normal goods. Dining out is a normal good, so its demand curve would shift leftward, indicating a decrease in demand at every price level.

Question 4

-Scooters and bicycles are substitutes.Suppose that the price of a bicycle falls.Which of the figures above best illustrates how this fall in price affects the demand curve for scooters?

Accepted Answer

The answer of 
-Scooters and bicycles are substitutes.Suppose that the...

Question 5

A student at New York University used to take the Redhound bus when she visited her grandmother in Boston.After graduating,although the bus fare and the plane fare were the same as they were when she was a student,with a well-paid job on Wall Street she now takes the plane to Boston to visit her grandmother.For this student,travel by Redhound bus is

Accepted Answer

An inferior good is a type of good for which demand decreases as income increases. In this case, the student used to take the Redhound bus when she had a lower income as a student, but now that she has a well-paid job, she chooses to fly instead. This indicates that the Redhound bus is an inferior good for this individual.

Question 6

Water bottlers announce that next month the price of bottled water will rise by 25 percent.Which of the following occurs immediately?

Accepted Answer

When consumers anticipate a future price increase, they may increase their current demand to purchase more before the price goes up.

Question 7

Consider the market for cellular phones.Which of the following shifts the demand curve leftward?

Accepted Answer

Studies showing that using cellular phones can cause brain cancer would cause consumers to be less willing to purchase cellular phones, resulting in a leftward shift of the demand curve.

Question 8

What happens to the demand for a good if a complement's price increases?

Accepted Answer

When the price of a complement increases, it becomes relatively more expensive to buy both products together. As a result, demand for the complementary good is likely to decrease, and consequently, demand for the original good will also decrease. This leads to a leftward shift in the demand curve for the original good.

Question 9

Hot dogs and hot dog buns are complements.If the price of a hot dog falls,then

Accepted Answer

Hot dogs and hot dog buns are complements, meaning they are often consumed together. Therefore, a decrease in the price of hot dogs would increase the demand for hot dogs, which would in turn increase the demand for hot dog buns as well. Hence, the correct answer is D.

Question 10

Ramen noodles are a staple food item for many college students.Ramen noodles are very inexpensive,easy to prepare,and can be combined easily with other foods.After students graduate,find employment,and earn a higher income,they decrease their Ramen noodle purchases significantly.In this case,Ramen noodles are

Accepted Answer

Ramen noodles are considered an inferior good because as consumers' income increases, their demand for Ramen noodles decreases. This is because they are able to afford higher quality, more expensive food options.

Question 11

If income increases and the demand for bus rides decreases,

Accepted Answer

This scenario suggests that bus rides are an inferior good, meaning that as income increases, consumers switch to alternatives like cars or taxis. This is different from a normal good, where demand actually increases as income increases.

Question 12

A popular dinner among college students today is sushi,green tea,and wasabi dip so these foods are complements.If the price of green tea increases and the price of wasabi dip increases,what would be the effect on demand for sushi at lunch?

Accepted Answer

Since green tea and wasabi dip are complements for sushi, an increase in their prices would lead to a decrease in demand for sushi. Therefore, the demand for sushi would decrease.

Question 13

You are just about to finish college and are about to start a high paying job.Because of this new job,what is the most likely outcome in the market for cars?

Accepted Answer

Your demand for cars is likely to increase because a higher income generally increases your purchasing power, making it more likely for you to afford and want to buy a car.

Question 14

Soda and hot dogs are complements for one another.If a shortage of carbonated water leads to an increase in the price of soda,then the

Accepted Answer

If the price of soda increases due to a shortage of carbonated water, people will likely reduce their consumption of soda. As soda and hot dogs are complements, the decrease in demand for soda will lead to a decrease in demand for hot dogs as well. Therefore, the demand for hot dogs will decrease.

Question 15

If the demand for digital cameras increases when consumers' incomes rise,then digital cameras are

Accepted Answer

The increase in demand for digital cameras with an increase in income indicates that digital cameras are a normal good. Normal goods are those whose demand increases with an increase in income.

Question 16

Suppose that tattoos gained immense popularity with retired people as well as college students.This gain in popularity best reflects which of the following influences on buying plans?

Accepted Answer

The gain in popularity of tattoos among both retired people and college students suggests a shift in preferences, as both groups are likely to have different attitudes and expectations towards tattoos. Income, the price of substitute goods, and the price of complement goods are not likely to be major factors driving this trend. Expectations could be a possible influence, but it is not as clear cut as preferences.

Question 17

Which of the following increases the demand for a good?

Accepted Answer

An expectation of higher future income will increase consumer confidence and willingness to spend more money, which in turn increases the demand for goods.

Answer: C 
 An increase in income may lead to a decrease in demand for inferior goods, but may also lead to an increase in demand for normal goods, as consumers have more disposable income to spend.

Answer: E 
 A fall in the price of a substitute good makes it less expensive relative to the good in question, thereby increasing the demand for the good.

Question 18

Which of the following is true?

Accepted Answer

For an inferior good, an increase in income leads to a decrease in demand, causing the demand curve to shift leftward.

Question 19

If macaroni and cheese is an inferior good,then a decrease in income results in

Accepted Answer

Inferior goods are those for which demand increases when consumer income decreases. Therefore, if income decreases, people are more likely to buy more macaroni and cheese, indicating an increase in demand for it.

Question 20

-Scooters are a normal good and buyers' incomes decrease.Which of the figures above best illustrates how this change affects the demand curve for scooters?

Accepted Answer

Since scooters are a normal good, a decrease in buyers' incomes would lead to a decrease in the demand for scooters. This is represented by a leftward shift of the demand curve, as shown in Figure B.

Quiz 4: Demand and Supply