Theory of Demand

The diagram represents a

• increase in demand
• decrease in demand

The law of demand states that

• a decrease in the price of a good shifts the demand curve leftward.

• other things remaining the same, the higher the price of a good, the smaller is the quantity demanded

• other thing remaining the same, the higher the price of a good, the larger is the quantity demanded.

• an increase in the price of a good shifts the demand curve leftward.

The law of demand states that the quantity of a good demanded varies

• inversely with its price.

• directly with population.

• directly with income.

• inversely with the price of substitute goods

The quantity demanded is

• the amount of a good that consumers plan to purchase at a particular price.

• independent of the price of the good.

• independent of consumers' buying plans.

• always equal to the equilibrium quantity

The law of demand states that, other things remaining the same, the higher the price of a good, the

• smaller is the demand for the good.

• larger is the demand for the good.

• smaller is the quantity of the good demanded.

• larger is the quantity of the good demanded.

Suppose people buy more of good X when the price of good Y falls. These goods are

• substitutes.

• inferior.

• normal.

• complements.

Normal goods are those for which demand decreases as

• the good's own price rises

• the price of a complement falls

• income decreases.

• the price of a substitute falls

Inferior goods are those for which demand increases as

• income decreases.

• income increases.

• the price of a substitute falls.

• the price of a substitute rises.

By definition, an inferior good is a

• normal substitute good.

• good for which demand decreases when its price rises.

• want that is not expressed by demand.

• good for which demand decreases when income increases.

Which of the following factor affects demand

• Price

• Change in income

• Taste of the Consumer

• All of these