Demand and Supply Review

What two factors are necessary for demand?

• desire for a good or service and its availability in the market
• desire for a good or service and the ability to pay for it
• the availability of a good or service and the ability to pay for it
• familiarity with a good or service and the desire to pay for it

According to the law of demand, what happens when prices go down?

• Demand increases.
• Quantity demanded increases.
• Demand decreases.
• Quantity demanded decreases.

Which is a teenager most likely to have demand for?

• new sports car
• luxury condominium
• athletic shoes
• building blocks

According to the law of demand, what is the relationship between quantity demanded and price?

• a complementary relationship
• an inverse relationship
• an orderly relationship
• a substitutionary relationship

What is a market demand schedule?

• a table showing how much of a product an individual will buy
• a table showing how much of a product a market will buy
• a graph showing how much of a product an individual will buy
• a graph showing how much of a product a market will buy

Which of the following describes a demand curve?

• It is a horizontal line.
• It slopes downward from left to right.
• It slopes downward from right to left.
• It is bow-shaped.

What is a market demand curve?

• a table showing how much of a product an individual is willing and able to buy
• a table showing how much of a product a market is willing and able to buy
• a graph showing how much of a product an individual is willing and able to buy
• a graph showing how much of a product a market is willing and able to buy

What assumption is used when making demand curves?

• All economic factors remain constant except price.
• All consumers lie about their purchasing habits.
• Inflation always causes product prices to rise.
• Availability of product is the most important variable.

What term is defined as the change in the amount consumers will buy because they can buy a different product instead?

• inferior goods
• normal goods
• income effect
• substitution effect

A factory closes, laying off hundreds of workers, and consumer spending in the town falls. What factor is affecting demand?

• consumer expectation
• consumer taste
• income
• substitutes