Unit 2 Review

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

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

The quantity demanded of a good or service changes at all price levels best describes the concept of

• change in quantity demanded

• elasticity

• change in demand

• demand curve

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

Consider the market for cellular phones. Which of the following shifts the demand curve leftward? 

• studies showing using cellular phones can cause brain cancer
• a decrease in the price of cellular phones
• a decrease in the quantity demanded of cellular phones
• an increase in the services provided by cellular phones, such as text messaging

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 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

What factor could have caused the demand to decrease?

• incomes increased
• expectation that prices will increase 
• a decrease in the price of a substitute 
• increase in market size

Ramen noodles are a staple food item for many college students. Ramen noodles are very inexpensive, easy to prepare, and can be combined easily with other foods. After students graduate, find employment, and earn a higher income, they decrease their Ramen noodle purchases significantly. In this case, Ramen noodles are: 

• a normal good
• an inferior good
• a complement for higher income people
• none of these are correct

If the demand for digital cameras increases when consumers' incomes rise, then digital cameras are

• a normal good
• an inferior good
• a substitute good
• a complement to video cameras