Supply and Demand Review

Front

The law of demand states that, other things remaining the same, the lower the price of a good, the

Back

larger will be the quantity of the good demanded.

Front

The law of demand implies that demand curves

Back

slope down.

Front

Which of the following is consistent with the law of demand? Options: An increase in the price of tapes causes an increase in the quantity of tapes demanded. An increase in the price of soda causes a decrease in the quantity of soda demanded. A decrease in the price of milk causes a decrease in the quantity of milk demanded. A decrease in the price of juice causes no change in the quantity of juice demanded.

Back

An increase in the price of soda causes a decrease in the quantity of soda demanded.

Front

When demand decreases (shifts to the left) and supply doesn't change, which of the following equilibrium changes occur?

Back

price falls and quantity decreases.

Front

A change in the price of a good

Back

does not shift the demand curve but does cause a movement along it.

Front

A change in which of the following alters buying plans for cars but does NOT shift the demand curve for cars? A 5 percent increase in household income. A 10 percent decrease in the price of car insurance. A 20 percent increase in the price of cars. An increased preference for walking.

Back

A 20 percent increase in the price of cars.

Front

Which of the following pairs of goods are substitutes?
Compact discs and disc players.
Cola and lemon lime soda.
Lettuce and salad dressing.
Peanut butter and jelly.

Back

Cola and lemon lime soda.

Front

The demand curve for a normal good shifts leftward if

Back

income falls or the expected future price falls.

Front

If a good is an inferior good, then purchases of that good will decrease when

Back

income rises.

Front

Most goods

Back

are normal goods.