IGCSE Economics Review Ch. 3

The law of demand refers to how

• demand changes when people's incomes change
• demand changes when the prices of substitutes and complements change
• the quantity demanded changes when the price of the good changes
• the price of the good changes when people's demand for the good changes

The law of demand says that when the price of a product rises, the quantity demanded decreases. Why do people buy fewer CDs if the price of a CD rises? 

• When the price rises, people get less pleasure from listening to music
• If CDs become more expensive, people switch to relatively less expensive alternative goods, such as cassette tapes
• Higher prices just turn people off
• Because CDs are a normal good

The downward slope of a demand curve

• represents the law of demand
• shows that as the price of a good rises, consumers increase the quantity they demand
• indicates how the quantity demanded changes when incomes rise and the good is a normal good
• indicates how demand changes when incomes rise and the good is a normal good

Market demand curves are obtained by

• determining the price each consumer is willing to pay for the good & summing those prices across all consumers
• observing the prices and quantities sold in a market over time and plotting those price-quantity combinations in a graph
• summing the quantities every consumer is willing to buy at each different price
• observing the behavior of an individual consumer in a market

The phrase "a change in demand" most directly implies a 

• movement along the curve
• movement along the price curve
• change in quantity demanded of a good
• shift in the demand curve

A change in the demand for apples could result from any of the following except

• a change in the number of buyers
• increased preferences for fresh fruit consumption for health reasons
• a change in the price of an apple
• a change in the price of a banana

To access Internet services, consumers must use a computer. If computer prices fall, what is the effect on the demand for Internet services

• the demand for Internet services increases
• the demand for Internet services decreases
• The demand for Internet services remains unchanged
• The demand for Internet services could increase, decrease, or stay the same depending on other factors 

Iceberg & romaine are two different types of lettuce. For most consumers, iceberg and romaine are 

• complements
• substitutes
• inferior goods
• resources

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

• the good is an inferior good
• the law of demand is violated
• the good's demand curve must be upward sloping
• the good is a normal good

If the demand for used cars decreases after the price of a new car falls, used cars and new cars are

• inferior goods
• substitute goods
• complementary goods
• normal goods