Understanding Demand in Economics

What does the law of demand state about the relationship between price and quantity demanded?

• Direct relationship: as price increases, quantity demanded also increases

• Inverse relationship: as price increases, quantity demanded decreases

• No relationship: changes in price do not affect quantity demanded

• Random relationship: changes in price may or may not affect quantity demanded

Which effect describes a scenario where consumers switch to a cheaper alternative when the price of a product increases?

• Income effect

• Substitution effect

• Utility effect

• Demand effect

What does the law of diminishing marginal utility explain about consumer satisfaction?

• Satisfaction is unpredictable

• Satisfaction decreases with each additional unit consumed

• Satisfaction increases with each additional unit consumed

• Satisfaction does not change with consumption

What happens to the demand curve when a product is perceived to have increased benefits?

• Shifts left

• Shifts right

• Remains unchanged

• Becomes vertical

If the price of a complement good decreases, what happens to the demand for the related good?

• Stays the same

• Increases

• Decreases

• Becomes unpredictable

Which scenario would cause the entire demand curve to shift to the right?

• Decrease in consumer income

• Increase in the price of a substitute

• All of the above

• Decrease in the price of the product

How does an increase in income affect the demand for a normal good?

• No effect on demand

• Demand fluctuates

• Demand increases

• Demand decreases

What is the effect called when consumers expect the price of a good to increase in the future?

• Future effect

• Expectation effect

• Speculation effect

• Demand anticipation

What is demonstrated when a movement along the demand curve occurs due to a change in price?

• Change in demand

• Change in quantity demanded

• Shift in demand

• Market adjustment

What is a key difference between a change in demand and a change in quantity demanded?

• Change in demand is caused by factors other than price

• Both are primarily driven by changes in consumer preferences

• Change in quantity demanded is caused by price changes only

• Change in demand is caused by price changes only