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What does the Law of Demand state?

• As price increases, demand increases

• As price decreases, quantity demanded increases

• Price and demand are unrelated

• Demand is fixed regardless of price

Which of the following best defines demand?

• The willingness and ability of consumers to buy goods and services

• The total supply of products in the market

• The cost of producing goods

• The government’s regulation of prices

The demand curve slopes:

• Upward

• Downward

• Horizontally

• Vertically

A supply curve slopes:

• Downward

• Upward

• Flat

• Zigzag

What is the Law of Supply?

• When price rises, quantity supplied decreases

• When price rises, quantity supplied increases

• Price and supply are unrelated

• None of the above

The term “Ceteris Paribus” means:

• Everything changes equally

• All things being equal

• Only demand changes

• Prices are constant

When the price of rice increases, consumers buy less rice. This is an example of:

• Supply effect

• Income effect

• Substitution effect

• Production effect

When consumers switch from milk tea to coffee because milk tea’s price increased, it is the:

• Substitution effect

• Demand shift

• Income effect

• Ceteris paribus

A demand schedule shows:

• Prices that producers are willing to sell

• Relationship between price and quantity demanded

• Total supply at various prices

• Government price controls

The demand curve plots:

• Price and time

• Price and quantity demanded

• Income and consumption

• Production and cost