Understanding The Law of Demand

1) What does this curve represent?

• supply

• equilibrium

• demand

• surplus

2. If the price of apples decreases, what happens to the quantity demanded for apples?

• The quantity demanded for apples remains the same.

• The quantity demanded for apples increases.

• The quantity demanded for apples decreases.

• The quantity demanded for apples fluctuates unpredictably.

3. When the price of coffee rises, what is likely to happen to the demand for tea?

• The demand for tea is likely to increase.

• The demand for tea will decrease.

• The demand for tea will fluctuate unpredictably.

• The demand for tea will remain unchanged.

4. If a consumer's income increases, how does this affect the demand for normal goods?

• The demand for normal goods decreases.

• The demand for normal goods increases.

• The demand for normal goods fluctuates unpredictably.

• The demand for normal goods remains unchanged.

5. What is the substitution effect?

• The substitution effect is the decrease in consumption of a good when its price increases.

• The substitution effect refers to the total change in income due to price changes.

• The substitution effect is the change in consumption patterns due to a change in the relative prices of goods.

• The substitution effect is the increase in demand for a good when its price decreases.

6. If the number of buyers in a market increases, what happens to the demand for the product?

• The demand for the product increases.

• The demand for the product fluctuates randomly.

• The demand for the product decreases.

• The demand for the product remains unchanged.

7. 7. Which of these shows a decrease in the quantity demanded?

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8. 8. Which of these shows an increase in the quantity demanded?

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9. 9. The diagram represents a

• increase in demand
• decrease in demand

10. What happens to the demand for inferior goods when consumer income rises?

• The demand for inferior goods fluctuates unpredictably.

• The demand for inferior goods increases.

• The demand for inferior goods remains unchanged.

• The demand for inferior goods decreases.