Demand Test Review

The desire to own something and the ability to pay for it is the definition of ________________.

• substitution effect

• law of demand

• demand

• demand schedule

The idea that consumers will buy more of a good when it's price is lower and less when its price is higher is the _____ ______ _________.

• substitution effect

• law of demand

• market demand schedule

• demand curve

A graphic representation of a demand schedule is called _________________.

• income effect

• market demand schedule

• demand curve

• demand

How does the law of demand affect the quantity demanded? (choose all that apply)

• Price changes always affect the quantity demanded because people buy LESS of a good when the price goes UP

• You can see how consumers react to price changes

• Price changes always affect the quantity demanded because people buy MORE a good when the price goes UP

The law of demand sates that when a good's price is lower, consumers will buy __________ of it.

• lesss

• more

• the same amount

According to the law of demand, when the price is _____________, consumers will buy less of it.

• lower

• higher

Demand is only the desire to want something, not the willingness to pay for it.

• True

• False

Which two effects can change the quantity of demand?

• price and quantity

• income and substitution

• location and prices

Cruz likes to chew one piece of sugarless gum each day. The gum costs only a tiny fraction of his weekly budget. The company that makes his favorite gum doubles its prices. What will Cruz do?

• buy a cheaper brand

• pay the doubled cost

• give up chewing gum

• try many different brands

Which of the following is the best example of a good that has inelastic demand?

• boat

• salt

• movie ticket

• diamond