Economics Review #1

Demand is defined as the different quantities or amounts of a resource, good, or service that consumers are _____________ to buy at various prices during a specific time period.

• Forced

• Willing and able

• Happy and able

• Willing and allowed

2. According to the law of demand, when the price of a good decreases: 

• 1. The quantity supplied of that good increases

• The quantity demanded of that good increases

• 1. The quantity demanded of that good decreases

• 1. The quantity demanded of that good stays the same

2. The law of demand states that when the price of a good increases, the quantity of that good that people are willing and able to buy decreases.

• True

• False

2. A demand schedule shows:

• 1. The quantity supplied of a good at one price over time.

• 1. The quantity demanded of a good at one price over time.

• 1. The quantity demanded of a good at various prices during a specific time period.

• 1. The quantity supplied of a good at various prices during a specific time period.

2. When the price of a haircut is $60.00, the quantity demanded of haircuts is: 

• 4

• 13

• 21

• 39

2. As the price of a haircut __________, the quantity demanded of haircuts ____________.

• Increases, increases

• Decreases, decreases

• Decreases, increases

• Decreases, stays the same

2. Cory has $10.00 that he is willing and able to spend on ice cream. When the price of a scoop of ice cream increases, he can buy fewer scoops of ice cream. This is an example of: 

• The income effect

• The substitution effect

• The price effect

• The supply effect

2. Priya likes both jeans and sweatpants about the same. When the price of a pair of jeans increases, she buys more pairs of sweatpants. This is an example of: 

• The income effect

• The demand effect

• The substitution effect

• The price effect