Econ Review

When the price of a product increases, a consumer is able to buy less of it. Which effect does this describe?

• Cost Effect

• Inflationary Effect

• Income Effect

• Substitution Effect

Which of these best describes the law of demand?

• if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up

• if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down

• there is no law of demand, each situation is unique and demand and prices cannot be predicted

• prices will go up for certain goods when quantity demanded goes up and vice versa

When the price of hot dogs decreases and the demand for hot dog buns increases, this explains the demand of

• Complementary goods

• Capital Goods

• Substitute Goods

• Consumer Goods

Goods for which demand goes down as income goes up are better known as

• Inferior Goods

• Normal Goods

• Public Goods

• Private Goods

The desire to have some good or service and the ability to pay for it

• supply

• equilibrium

• demand

• quantity demanded

Thousands of people leave a small town due to a factory closing down. Sales at the local stores drop. What causes this change?

• Prices or availability of substitutes

• Prices or availability of complementary goods

• Change in Preferences

• Change in Population

The law of demand states that

• price and quantity demanded are inversely related

• the larger the number of buyers in a market, the lower will be product price

• price and quantity demanded are directly related

• consumers will buy more of a product at high prices than at low prices

When consumers react to an increase in a good's price by consuming less of that good and more of other goods.

• Cost Effect

• Income Effect

• Substitution Effect

• Inflationary Effect

The desire to have some good or service and the ability to pay for it

• supply

• equilibrium

• demand

• quantity demanded

A change in the price of a good causes people to buy more or less of an item. This best describes the concept of

• the demand curve

• change in quantity demanded

• change in demand

• elasticity