Supply and Demand Quiz

What is the law of demand?

• An increase in price causes an increase in quantity demanded

• A decrease in price causes a decrease in quantity demanded

• An increase in price causes a decrease in quantity demanded

• A decrease in price causes an increase in quantity demanded

What are the non-price determinants of demand?

• Consumer tastes and preferences, market size, prices of related goods, changes in income, expectations of the future

• Consumer tastes and preferences, market size, prices of related goods, changes in income, expectations of the past

• Consumer tastes and preferences, market size, prices of unrelated goods, changes in income, expectations of the future

• Consumer tastes and preferences, market size, prices of unrelated goods, changes in income, expectations of the past

Why are demand curves downward sloping?

• Due to the income effect, substitution effect, and diminishing marginal utility

• Due to the income effect, substitution effect, and increasing marginal utility

• Due to the income effect, complementary effect, and diminishing marginal utility

• Due to the income effect, complementary effect, and increasing marginal utility

What is the law of supply?

• An increase in price causes an increase in quantity supplied

• A decrease in price causes a decrease in quantity supplied

• An increase in price causes a decrease in quantity supplied

• A decrease in price causes an increase in quantity supplied

What are the non-price determinants of supply?

• Prices of resources or inputs, government tools, competition, technology, prices of other goods, producer expectations

• Prices of resources or inputs, government tools, competition, technology, prices of unrelated goods, producer expectations

• Prices of resources or inputs, government tools, competition, technology, prices of other goods, consumer expectations

• Prices of resources or inputs, government tools, competition, technology, prices of unrelated goods, consumer expectations

What causes a decrease in demand?

• An increase in consumer tastes and preferences

• A decrease in number of consumers

• A decrease in prices of related goods

• An increase in income

What causes an increase in supply?

• A decrease in prices of resources or inputs

• An increase in government regulations

• A decrease in competition

• An increase in prices of other goods

What is the income effect?

• Changes in price cause changes in income purchasing power

• Consumers substitute goods for less expensive alternatives

• The benefit gained by consuming more of a good decreases with each unit consumed

• Changes in consumer tastes and preferences impact demand

What is the substitution effect?

• Changes in price cause changes in income purchasing power

• Consumers substitute goods for less expensive alternatives

• The benefit gained by consuming more of a good decreases with each unit consumed

• Changes in consumer tastes and preferences impact demand

What is diminishing marginal utility?

• Changes in price cause changes in income purchasing power

• Consumers substitute goods for less expensive alternatives

• The benefit gained by consuming more of a good decreases with each unit consumed

• Changes in consumer tastes and preferences impact demand