Law of Demand

What is a market?

• A place that brings together buyers and sellers

• A specific type of product

• A government-regulated pricing system

• An economic theory

What does a demand curve show?

• The total revenue of a company

• The relationship between supply and demand

• The quantities of a product purchased at different prices

• The maximum price a consumer is willing to pay

What is the law of demand?

• Consumers buy more at higher prices

• Demand remains constant regardless of price

• Price has no effect on quantity demanded

• Consumers buy more at lower prices

What is an example of the law of demand?

• Government policies

• Rush at clearance sales

• Fixed pricing strategies

• Supply schedules

What causes the income effect on demand?

• A change in consumer preferences

• A decline in the price of a product

• An increase in the price of substitutes

• Government intervention

What is the substitution effect?

• Substituting a high-priced product with a low-quality one

• Choosing between products based on quality

• Substituting a high-priced product with a lower-priced one

• Ignoring price changes in the market

Why are consumers willing to buy more of a product at a lower price?

• Due to increased advertising

• Because of government subsidies

• Due to the income and substitution effects

• Because of diminishing marginal utility

How does consumer expectation about future prices affect current demand?

• It has no effect on current demand

• Expectation of higher future prices decreases current demand

• Expectation of lower future prices increases current demand

• Expectation of higher future prices increases current demand

What role does advertising play in consumer demand?

• It decreases the elasticity of demand

• It has no effect on demand

• It increases consumer awareness and can increase demand

• It only affects the demand for luxury goods