Reference no: EM133063034

1. Per the Law of Demand, what happens to the quantity consumers buy when the price goes down?

a. the quantity demanded increases

b. the quantity demanded decreases

2. According to the substitution effect, why do changes in price motivate consumers to buy relatively cheaper substitute goods?

a. they move away from products that are now relatively less expensive

b. they move away from products that are now relatively more expensive

3. According to the income effect, changes in price affect the purchasing power of consumers' income. Why is this?

a. at a lower price, you are able to buy less of the product

b. at a lower price, you are able to buy more of the product

4. What does the law of diminishing marginal utility teach us?

a. the more of a product you consume, the less satisfaction you get from each additional unit consumed

b. the more of a product you consume, the more satisfaction you get from each additional unit consumed

5. What happens when the demand curve shifts?

a. At every available price, producers will supply more or less of the product.

b. At every price, people are going to buy less or more of the product.

6. Which of the following answer choice causes the demand curve to "shift"?

a. Price

b. Taste/Preference

c. Resource Cost

7. What happens to the demand for "Normal Goods" when income increases?

a. demand will decrease

b. No change in demand will occur

c. demand will increase

8. What happens to the demand for inferior goods whenever income is decreased?

a. demand will decrease

b. no change in demand will occur

c. demand will increase

9. What causes a change in the quantity demanded for a product?

a. a change in one of the shifters of demand

b. a change in price

c. the invisible hand

10. What causes a change in demand?

a. market equilibrium

b. a change in one of the shifters of demand

c. a change in price

11. What happens to the demand for a product when the price decreases?

a. the demand will shift to the left

b. the demand will shift to the right

c. demand stays the same, but the quantity demanded increases

12. Once again, what is the only thing that changes the quantity demand?

a. a change in one of the shifters of demand

b. change in price

c. market interaction