ECO 162 - Chapter 2

Whenever the price of good Z decreases, the demand for good W increases. Goods W and Z should be

• normal goods

• inferior goods

• substitutes

• complements

If the demand for ‘harum manis’ mango rises as income rises, ‘harum manis’ mango is

• a normal good

• a necessity good

• a substitute good

• an inferior good

In the market of tea, we can consider

• Milo as complementary good

• Sugar as complementary good

• Milk as substitutes good

• Milo as unrelated good

If pen and ink are complementary goods, an increase in the price of pen will result in

• A decrease in the demand of ink

• An increase in the demand of ink

• An increase in the price of ink

• No change in either the price or sales of ink

An increase in the number of consumers in a market will cause

• only a movement along the demand curve

• only a movement along the supply curve

• the demand curve to shift rightward

• the supply curve to shift leftward

Which of the following would cause the demand curve of clothes to shift to the right?

• Price of clothes decreases

• Price of cotton increases

• Price of clothes increases

• Consumers’ income increases

Subsidies given to vegetable farmers will result in

• a shift in the supply curve of vegetables

• a shift in the demand curve for vegetables

• a movement along the supply curve of vegetables

• a movement along the demand curve of vegetables

An economic theory claims that an increase in the price of petrol will cause petrol purchases to fall, ceteris paribus. The phrase "ceteris paribus" means that

• consumers' need for petrol remains the same regardless of the price

• the petrol price must be adjusted for inflation

• petrol is considered a luxury good

• other relevant factors like consumer income must be held constant