Economics - Topic 3 - Supply & Demand

In economic terms, the marketplace

• exists only at the local level.

• is a place where people buy food.

• exists only at the national level.

• operates through voluntary exchange.

Which statement reflects the inverse relationship between quantity demanded and price?

• As the price goes up, quantity demanded goes up.

• As the price goes down, quantity demanded goes up.

• As the supply goes up, the price goes up.

• As the supply goes up, the demand goes up.

According to the substitution effect, if two items satisfy the same need and the price of one rises,

• people will buy more of the higher-priced item.

• people will buy more of the lower-priced item.

• the demand will go up.

• people will buy something else.

Which economic rule states that the additional satisfaction people get from consuming one more unit of a product will lessen with each additional unit they consume?

• real income effect

• law of diminishing marginal utility

• law of demand

• substitution effect

The amount of goods and services people can actually buy is their

• voluntary exchange.

• purchasing power.

• utility.

• substitution effect.

How does an increase in consumer population affect the demand for most products?

• demand decreases

• prices go down

• demand increases

• prices go up

A shift to the left in the demand curve indicates a(n)

• decrease in price.

• decrease in demand.

• increase in population.

• increase in demand.

When a product becomes a fad, the demand curve for that product

• slopes upward.

• becomes a straight line.

• shifts to the right.

• shifts to the left.

Which of the following goods has inelastic demand?

• sugar

• a particular brand of coffee

• Diet Coke

• a t-bone steak

If two products are complementary goods, how will a decrease in the price of one affect the other?

• demand will increase

• price will increase

• demand will decrease

• price will decrease