Supply and Demand (Unit 2)

A demand schedule is best described as ______.

• a graph.

• an incentive.

• data.

• a time line.

When the price of something increases, the quantity demanded ____.

• increases.

• decreases.

• remains unchanged.

• reverses.

Consider the term marginal utility. Which word is the best synonym for marginal?

• useful

• satisfactory

• borderline

• additional

Why is a demand curve downward sloping?

• because quantity demanded increases as price decreases

• because of the natural elasticity of the market

• because it shows how increasing incentives changes demand

• because it reflects the desire, ability, and willingness of consumers

Why is the Law of Demand called a "law"?

• because it is legally required

• because there are no exceptions to it

• because it has been demonstrated repeatedly

• because it is an economic term

A change in quantity demanded is represented by

• movement along the demand curve.
• a shift of the demand curve.

• substitution.

• complements.

What is the main cause of a change in quantity demanded?

• substitution

• changes in revenue

• change in price

• the income effect

What is the relationship between income and demand?

• A) A decrease in income increases demand.

• B) A decrease in price decreases income.

• C) An increase in price increases income.

• D) An increase in income increases demand.

Which of the following replaces a costly item with a less costly one?

• the substitution effect

• the income effect

• change in demand

• consumer taste

Demand elasticity is the extent to which a change in price causes a change in the quantity demanded.

• True

• False