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WorksheetsEconomins - Theory of Demand
Total questions: 65
Worksheet time: 41mins
The desire to have some good or service and the ability to pay for it
supply
equilibrium
demand
quantity demanded
Which of these best describes the law of demand?
if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up
if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down
there is no law of demand, each situation is unique and demand and prices cannot be predicted
prices will go up for certain goods when quantity demanded goes up and vice versa
A change in the price of a good causes people to buy more or less of an item. This best describes the concept of
the demand curve
change in quantity demanded
change in demand
elasticity
The quantity demanded of a good or service changes at all price levels best describes the concept of
change in quantity demanded
elasticity
change in demand
demand curve
Which of these shows a decrease in the quantity demanded?
When the price of good A rises, people start to drink good B. In this case, what is good B considered?
luxury good
complementary good
substitute good
normal good
A decrease in the average incomes of consumers will result in which of the following?
A decrease in the demand for goods and services
An increase in the demand for goods and services
A decrease in the supply of goods and services
An increase in the supply of goods and services
The law of demand states; there is an INVERSE relationship between price and quantity demanded. Which of the following is not a true statement?
Price goes up qty demanded goes down.
Price goes down, qty demanded goes up.
Price goes up, demand goes down.
All answers are correct.
What is the relationship between the Price and Quantity Demanded?
Positive Relationship
Direct Relationship
Inverse Relationship
Mixed Relationship
The law of demand argues that as prices rise
the quantity demanded will fall
the quantity demanded will rise
the demand curve will shift to the right
quantity demanded will fall due to a decrease in demand
The 'law of supply' suggests that
price and quantity supplied are directly related
price and quantity supplied are inversely related
movements along the supply curve are caused by a price fall
supply will expand until market equilibrium is reached
What does it mean?
Ed = 0
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
What does it mean?
Ed < 1
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
What does it mean?
Ed < 1
Perfectly inelastic demand
Inelastic demand
Unitarily elastic demand
Elastic demand
Perfectly elastic demand
Describe your demand for a product if you buy the same amount of it or just a small amount less after a large price increase.
elastic
unitary elastic
inelastic
hyperelastic
Prada has seen a increase in demand of 70%, while the price has decreased 35%
.5 inelastic
.5 elastic
2 inelastic
2 elastic
How does elasticity affect potential revenue for a firm?
If demand for a good is inelastic, lowering the price could raise revenue.
If demand for a good is inelastic, raising the price could reduce revenue.
If demand for a good is elastic, raising the price must increase revenue.
If demand for a good is elastic, raising the price could reduce revenue.
Which of the following is an example of inelastic demand?
Jason wants the most expensive cellphone. He decides to get a cheaper model.
Priya wants to go to the season-opening game. Tickets to another game cost less, but she still buys tickets for the opener.
Tianna wants to try out a new, expensive restaurant. She goes to another restaurant whose food is excellent and costs less.
Shawn wants to buy a house in one neighborhood. But after searching, he decides to buy a house elsewhere instead.
During the COVID 19 Pandemic we are all experiencing now, and the information campaign from the Center for Disease Control highlighting that bacteria and other organisms cause and spread disease, will the demand curve for soap be more elastic or more inelastic?
More elastic
More inelastic
After more employers allow employees to telecommute, will the demand curve for cars be more elastic or more inelastic?
More elastic
More inelastic
After the invention of nuclear power plants, will the demand curve for coal power plants be more elastic or more inelastic?
More elastic
More inelastic
After an economic boom, will the demand curve for TVs be more elastic or more inelastic?
More elastic
More inelastic
Which of the following pairs is an example of substitutes?
Cereal and Milk
calculators and iPods
Gatorade and Powerade
water skiing and skateboarding
When the price of something increases, the quantity demanded ___?
decreases
reverses
increases
remains the same
Which of the following would cause the demand curve to
shift to the left?
the average annual income increases
government corporate taxes increase
consumers begin to like the product
price of a complementary good increases
What would not cause a change (shift) in the demand curve?
a decrease in the salary’s of the population
a change in popularity of the good
a change in price of the good
an increase in the price of a substitute good
If price of tea decreases, what is the affect on the demand for coffee?
the demand for tea is not affected
the demand for coffee decreases
the demand for tea decreases
the demand for coffee increases
Which of the following would cause the demand curve to
shift to the right?
a popular toys loses appeal
Suppliers expect higher prices in the future
price of a substitute good decreases
the average annual income increases
Which of the following would cause the demand curve to
shift to the left?
price of a substitution good decreases
huge population increase
new government regulations
consumers begin to like the product
Which of the following would cause the demand curve to
shift to the left?
price of a substitution good decreases
huge population increase
new government regulations
consumers begin to like the product
Which of the following would cause the demand curve to
shift to the left?
price of a complementary good decreases
huge population increase
new government regulations
consumers begin to dislike the product
Definition of Marginal Utility
the satisfaction from consumption
to total satisfaction from consuming a product
the extra satisfaction from the last unit consumed
the extra consumption from last unit consumed
The definition of the law of diminishing marginal utility
As more units are consumed the marginal utility falls.
As more units are consumed the marginal utility increases.
As price decreases quantity demanded increases.
As price increases consumers are willing to pay more.
The total utility definition states:
The usefulness, benefit or satisfaction a consumer gains from consuming a product.
The satisfaction gained from consuming a quantity of an economic good, measured in utils.
The added consumer satisfaction from consuming a quantity of a good.
The consumer's satisfaction from consuming a quantity of a good.
Consumer equilibrium occurs when ...
they have spent all of their income.
a person consumes quantities of three goods.
a person consumes quantities of two goods.
satisfaction is maximised for a given level of income.
The law of demand assumes ceteris paribus which means ...
factors such as price remains unchanged.
all other factors remain unchanged.
that the only factor to change is the consumer's income.
all of the above.
The relationship between demand and marginal utility is best explained as ...
the marginal utility a person gets from consuming a good determines their demand for the good.
the total utility a person gets from consuming a good determines their demand for the good.
the marginal utility a person gets from consuming a good determines their market demand for the good.
the total utility a person gets from consuming a good determines their market demand for the good.
Harry Munkee loves eating bananas. His total utility for for 3 bananas is ?
70
71
72
73
Harry's marginal utility for 2 bananas is ?
23
32
25
26
Total utility is the benefit received from consuming an extra unit of a good.
TRUE
FALSE
Consumers will maximize satisfaction when
the price of each good is exactly equal to the price of every other good consumed
the price of each good is exactly equal to the total utility derived from the consumption of every other good
the marginal utility of the last dollar spent on each good is exactly equal to the marginal utility of the last dollar spent on any other good
marginal utility is equal to average utility
Which of the following is true if consuming one unit of good yields 100 utils and consuming the second unit of the good increases satisfaction by 20 utils?
The marginal utility of the first unit is 20
The marginal utility of the second unit is 80
The marginal utility of the second unit is 120
The total utility of consuming two units is 120
Which of the following best expresses the law of diminishing marginal utility?
the more a person consumes of a product, the smaller becomes the total utility that he receives from its consumption
the more a person consumes of a product, the smaller becomes the additional utility that he receives from consuming each additional unit
the less a person consumes of a product, the smaller becomes the total utility that he receives from its consumption
the less a person consumes of a product, the smaller becomes the additional utility that he receives from consuming each additional unit
Jake enjoys having either a chicken bolognese or prawn aglio olio for his dinner. A drop in the price of prawn increases the marginal utility per dollar of prawn and causes Jake to buy more prawn and less chicken to restore maximum utility. This best illustrates the
Law of diminishing marginal utility
Income effect
Substitution effect
Law of increasing total utility
The substitution effect explains that when the price of a good increases, consumers will consume
less of the more expensive good and more of some other good
more of the good because their real incomes are lower after the price increase
more of the more expensive good and less of some other good
less of the good because their real incomes are lower after the price increase
The income effect explains that when the price of a good increases, consumers will consume
less of the more expensive good and more of some other good
more of the more expensive good and less of some other good
more of the good because their real incomes are lower after the price increase
less of the good because their real incomes are lower after the price increase
