2.1 - Quiz on the Law of Demand

What is the Law of Demand?

• As the price of a good increases, the quantity demanded decreases.

• As the price of a good increases, the quantity demanded increases.

• The quantity demanded remains constant regardless of price changes.

• The quantity demanded is not affected by consumer preferences.

How does the Law of Demand affect business decisions?

• Businesses may lower prices to increase demand.

• Businesses ignore demand when setting prices.

• Businesses always increase prices to boost demand.

• The Law of Demand has no impact on business strategies.

What does the law of demand state?

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

• Consumers buy less of a good when its price decreases.

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

• Consumers buy the same amount regardless of price changes.

What is demand?

• The ability to produce something.

• The desire to own something and the ability to pay for it.

• The need to sell something at a high price.

• The requirement to save money.

What are the two effects that result in the law of demand?

• The substitution effect and the income effect.

• The production effect and the consumption effect.

• The supply effect and the demand effect.

• The price effect and the cost effect.

What occurs when consumers react to an increase in a good's price by consuming less of that good and more of other goods?

• Income Effect

• Substitution Effect

• Price Effect

• Demand Effect

What happens when a person changes their consumption of goods and services as a result of a change in real income?

• Substitution Effect

• Price Effect

• Income Effect

• Demand Effect

When prices on normal goods increase, consumers will buy more of which type of goods?

• Luxury Goods

• Inferior Goods

• Normal Goods

• Essential Goods

When their income increases, people will buy more of which type of goods?

• Inferior Goods

• Luxury Goods

• Normal Goods

• Essential Goods

What is a demand schedule?

• A list of prices for a product

• A table that lists the quantity of a good a person will buy at each different price

• A chart showing supply levels

• A graph of market trends