ECON TEST 3: Quizzes 4 - 6

According to the Law of Demand, what happens to the QUANTITY demanded when the PRICE of a good increases?

• The quantity demanded goes down

• The quantity demanded becomes unpredictable

• The quantity demanded increases

• The quantity demanded stays the same

According to the Law of Demand, what happens to the quantity DEMANDED when the PRICE of a good decreases?

• The quantity demanded goes down

• The quantity demanded increases

• The quantity demanded becomes unpredictable

• The quantity demanded stays the same

Why does the quantity of a good DEMANDED usually increase when the PRICE of the good decreases?

• Consumers’ incomes automatically rise when prices fall

• Suppliers increase production at lower prices, which forces consumers to buy more

• Government regulations require consumers to purchase more goods when prices fall

• Lower prices make the good more attractive because people can afford to buy more of it

A demand curve shows the relationship between what two economic FACTORS?

• Quantity demanded and supply

• Price and quantity supplied

• Price and demand

• Demand and quantity supplied

Which of the following best describes the difference between a MOVEMENT vs. a SHIFT in the demand curve?

• Movement is due to supply changes, while shift is due to price changes

• Movement is due to price changes, while shift is due to other factors

• Movement is due to government policy, while shift is due to consumer preferences

• Movement is due to technology, while shift is due to price changes

A decrease in consumer INCOME would most likely result in which of the following?

• No change in the demand curve

• A movement up along the demand curve

• A movement down along the demand curve

• A shift of the demand curve to the left

Which of the following is an example of how TARIFFS usually influence consumer demand.

• Tariffs only affect the quality of goods, not the price or demand.

  
  

• Tariffs can make imported goods more expensive, leading consumers to buy more locally produced alternatives.

  
  

• Tariffs always make imported goods cheaper, so consumers buy more imports.

  
  

• Tariffs have no effect on consumer choices or demand.

Why might the demand for new furniture decrease significantly during periods of INFLATION (rising prices all throughout the economy)?

• Because inflation makes people want to buy more furniture.

• Because new furniture is a luxury and people cut back on non-essential spending.

• Because furniture prices decrease during inflation.

• Because new furniture becomes more durable during inflation.

If INFLATION causes the PRICE of GAS to rise, would you expect the demand for GAS to drop sharply, or not much?

• Demand would not drop much

• Demand would drop sharply

• Demand would increase sharply

• Demand would stay exactly the same

Which of the following best describes elastic demand?

• Demand that increases as price increases.

• Demand that is only for goods with no substitutes.

• Demand that is sensitive to price changes, often for luxury goods with substitutes available.

• Demand that is not affected by price changes, usually for necessities.