ABBE1033 Lecture 2 The Mechanics of Markets: Demand Theory

What does the term 'demand' refer to in economics?

• The ability of sellers to produce goods
• The willingness and ability of buyers to purchase different quantities of a good at different prices
• The total quantity of goods available in the market
• The price at which goods are sold

According to the Law of Demand, what happens when the price of a good rises?

• The quantity demanded of the good increases
• The quantity demanded of the good falls
• The supply of the good increases
• The demand for substitutes decreases

What does 'ceteris paribus' mean in the context of the Law of Demand?

• All other things held constant
• All prices are variable
• All quantities are fixed
• All buyers are rational

What is the relationship between price (P) and quantity demanded (Qd) according to the Law of Demand?

• Direct relationship
• Inverse relationship
• No relationship
• Exponential relationship

If the price of a good falls, what is the expected change in quantity demanded, assuming ceteris paribus?

• Quantity demanded decreases
• Quantity demanded increases
• Quantity demanded remains the same
• Quantity demanded fluctuates

What is the primary focus of the Law of Demand?

• The relationship between supply and demand
• The relationship between price and quantity demanded
• The relationship between consumer income and demand
• The relationship between market equilibrium and demand

Which of the following best describes a demand curve?

• A graph showing the relationship between supply and price
• A graph showing the relationship between price and quantity demanded
• A graph showing the relationship between income and demand
• A graph showing the relationship between quantity supplied and quantity demanded

What is the expected effect on the demand of a normal good if consumer income increases, assuming all other factors remain constant?

• Demand decreases
• Demand increases
• Demand remains unchanged
• Demand fluctuates unpredictably

Which of the following is an example of a factor that could shift the demand curve?

• A change in the price of the good
• A change in consumer preferences
• A change in the supply of the good
• A change in production technology

Which of the following best describes the Law of Demand?

• As price increases, quantity demanded increases
• As price decreases, quantity demanded decreases
• As price increases, quantity demanded decreases, ceteris paribus
• Price and quantity demanded have no relationship