The Law of Demand and its Determinants

The presence of substitutes has an effect on the demand for a certain good or service.

• True

• False

When something other than price causes demand to change, there is a movement along the demand curve.

• True

• False

As income increases, the demand for normal goods increases.

• True

• False

If the government announces today that a tax increase of 50 cents per pack of cigarettes is to take place in two weeks, what would you expect to happen today to the current market for cigarettes?

• The demand for cigarettes would increase.

• The demand for cigarettes would decrease.

• The price of cigarettes would increase.

Which of the following would not shift the demand curve for beef?

• A widely publicized study which indicates beef increases one's cholesterol

• A reduction in the price of cattle feed.

• An effective advertising campaign by pork producers

• A change in the incomes of beef consumers

Which of the following statements about demand curves is true?

• If price falls and quantity demanded increases, this is represented by a movement along a given demand curve.

• If price falls and quantity demanded increases, this is represented by a shift of the demand curve.

• If price falls and quantity demanded increases, this can be represented by either a movement along a given demand curve, or a shift of the demand curve.

• All of the above are true.

Which of the following will not cause a shift in the demand curve for product K?

• A change in the price of close-substitute product J

• Government officials plan to ban the sale of product K to minors

• A change in the price of K

• A change in consumer tastes

If bread is an inferior good (a good that people buy less of the more income they have), then what will happen in the market for bread as the consumer income increases?

• The quantity will increase.

• The quantity will decrease.