Economics - Chapter 4 - Quiz

According to the Law of Demand, when prices drop...

• demand will also drop

• demand will increase

• quantity demanded is unchanged

• supply increases

A product may be amazing, but unless people can actually afford it, it's not really in demand.

• True

• False

An oil refinery fire could cause the price of gas to __

• increase

• decrease

• stabilize

• fluctuate wildly

When the price of a product increases, a consumer is able to buy less of it. Which effect does this describe?

• Cost Effect

• Inflationary Effect

• Income Effect

• Substitution Effect

Consider the market for cellular phones. Which of the following shifts the demand curve to the left?

• studies showing using cellular phones can cause brain cancer

• a decrease in the price of cellular phones

• a decrease in the quantity demanded of cellular phones

• an increase in the services provided by cellular phones, such as text messaging

Goods for which demand goes down as income goes up are better known as

• Inferior Goods

• Normal Goods

• Public Goods

• Private Goods

A new study has shown that avocados are extremely healthy. The demand for avocados has increased due to a change in

• Population

• Price of Substitute Good

• Price of Complementary Good

• Consumer Preferences/Tastes

Goods for which demand goes down as income goes up are better known as

• Inferior Goods

• Normal Goods

• Public Goods

• Private Goods

Your favorite snack has a sudden price increase of $2. You are forced to settle for a substitute cheaper snack. The demand for your favorite snack is

• Inelastic

• Elastic

• Unitary Elastic

• Ceteris Paribus

When consumers react to an increase in a good's price by consuming less of that good and more of other goods.

• Cost Effect

• Income Effect

• Substitution Effect

• Inflationary Effect