Economics Quiz: Demand and Supply

What is the law of demand?

• Quantity demanded remains constant regardless of price changes.

• Price has no effect on quantity demanded.

• There is an inverse relationship between price and quantity demanded.

• There is a direct relationship between price and quantity demanded.

What does the substitution effect explain in relation to demand?

• Price changes have no impact on consumer behavior.

• Consumers buy more of a good when its price increases.

• Consumers will always buy the same product regardless of price changes.

• Consumers switch to other products when the price of a good changes.

What is the law of diminishing marginal utility?

• Consumers will always prefer quantity over quality.

• Consumers will never get tired of consuming a particular good.

• Consumers will experience decreasing additional satisfaction as they consume more of a good.

• Consumers will always experience increasing satisfaction from consuming more of a good.

What happens to the demand curve when there is a decrease in demand?

• The curve shifts to the right.

• The curve shifts to the left.

• The curve becomes steeper.

• The curve becomes flatter.

Which of the following is a determinant of demand?

• Price of the good itself.

• Price of related goods.

• Price of raw materials.

• Price of labor.

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

• A change in demand is caused by a change in price.

• A change in demand is due to a change in quantity supplied.

• A change in quantity demanded is caused by a shift in the demand curve.

• A change in quantity demanded is due to a change in consumer preferences.

What is the income effect in relation to demand?

• Consumers always prefer luxury goods over necessities.

• Consumers' purchasing power has no impact on their buying behavior.

• Consumers buy less of a good when their income increases.

• Consumers buy more of a good when their income decreases.

What causes the demand curve to shift to the right?

• An increase in the price of related goods.

• A positive change in consumer expectations.

• A decrease in income.

• A decrease in the number of consumers.

What is the substitution effect of a price increase for a good?

• Consumers ignore price changes when making purchasing decisions.

• Consumers stop buying the good altogether.

• Consumers buy more of the good as its price increases.

• Consumers switch to other goods as the price of the good increases.

How does a change in expectations affect demand?

• It causes a decrease in demand.

• It has no impact on demand.

• It depends on the specific product and market conditions.

• It always leads to an increase in demand.