Supply and Demand

As prices go down what happens to demand?

• decreases
• increases
• stays the same
• Option 4

What effect would a decrease in price have on consumption of goods (income effect)?

• You may choose to buy more of that good.
• You feel like you have more money.
• You may buy other goods you didn’t before.
• All of the above

As price per gallon increases, what is the effect on demand?

• increases
• decreases
• stays the same

At $1.60 a gallon what is the quantity of gasoline demanded?

• 460 million gallons
• 550 million gallons
• 800 million gallons
• 600 million gallons

The law of demand states that consumers buy more of a good when the price _________________________ and less when the price __________________________.

• Option 1
• increases, decreases
• decreases, increases
• drops by 25%, increases by 25%
• stays the same, decreases

Apples increases in price, so you now switch to buying more oranges, This is an example of _________________.

• inelasticity
• substitution effect
• elasticity
• law of demand

A good you buy less of as the price increases is said to be __________________________.

• Inelastic
• Elastic
• complementary
• normal good

Which pair of goods would be considered complementary?

• apples and oranges
• phone and a car
• dress pants and dress shirt
• TV and a table

The amount/number of goods that are available for consumers to purchase is known as __________________.

• demand
• fixed cost
• subsidy
• supply

The law of supply states that as price _______________ the quantity supplied increases.

• decrease
• increases
• stays the same