Financial Literacy Concepts

The law of demand states the relationship between the price of a good or service and the quantity demanded is:

• Directly proportional

• Inversely proportional

• Unrelated

• Constant

According to the law of demand, as the price of a good or service decreases, what happens to the quantity demanded?

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

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

• As the price of a good or service decreases, the quantity demanded remains the same.

• As the price of a good or service decreases, the quantity demanded becomes unpredictable.

The relationship between price and demand is an _______ relationship.

• inverse

• direct

• neutral

• unrelated

Excited shoppers going to a Black Friday sale is an example of which economic law?

• Law of Supply

• Law of Demand

• Law of Diminishing Returns

• Law of Comparative Advantage

What can influence the change in demand due to price?

• Consumer preferences

• Price elasticity

• Government policies

• Technological advancements

The real income effect states about the relationship between price rise and a person's income that:

• a person's real income increases as prices rise.

• a person's real income decreases as prices rise.

• a person's real income remains unchanged as prices rise.

• a person's real income is not affected by price changes.

The substitution effect indicates that a good or service will be purchased more often if it has a ______ price and satisfies the consumer to a similar extent as a comparable product with a higher price.

• lower

• higher

• similar

• variable

What does the law of supply say about the relationship between the price of a good or service and the quantity supplied?

• The law of supply states that as the price of a good or service increases, the quantity supplied increases, and vice versa.

• The law of supply states that as the price of a good or service increases, the quantity supplied decreases, and vice versa.

• The law of supply states that there is no relationship between the price of a good or service and the quantity supplied.

• The law of supply states that as the price of a good or service decreases, the quantity supplied remains constant.

According to the law of supply, as the price of a good or service decreases, what happens to the quantity supplied?

• The quantity supplied decreases.

• The quantity supplied increases.

• The quantity supplied remains the same.

• The quantity supplied becomes zero.

The relationship between price and supply is a ______ relationship.

• parallel

• inverse

• direct

• cyclical