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Economics: Final Exam - Revision Law of Demand

Total questions: 90

Worksheet time: 3hrs 0mins

Name
Class
Date
1.
The law of demand refers to how
a)
demand changes when people's incomes change
b)
demand changes when the prices of substitutes and complements change
c)
the quantity demanded changes when the price of the good changes
d)
the price of the good changes when people's demand for the good changes
2.
The law of demand says that when the price of a product rises, the quantity demanded decreases. Why do people buy fewer CDs if the price of a CD rises? 
a)
When the price rises, people get less pleasure from listening to music
b)
If CDs become more expensive, people switch to relatively less expensive alternative goods, such as cassette tapes
c)
Higher prices just turn people off
d)
Because CDs are a normal good
3.
The downward slope of a demand curve
a)
represents the law of demand
b)
shows that as the price of a good rises, consumers increase the quantity they demand
c)
indicates how the quantity demanded changes when incomes rise and the good is a normal good
d)
indicates how demand changes when incomes rise and the good is a normal good
4.
Market demand curves are obtained by
a)
determining the price each consumer is willing to pay for the good & summing those prices across all consumers
b)
observing the prices and quantities sold in a market over time and plotting those price-quantity combinations in a graph
c)
summing the quantities every consumer is willing to buy at each different price
d)
observing the behavior of an individual consumer in a market
5.
The phrase "a change in demand" most directly implies a 
a)
movement along the curve
b)
movement along the price curve
c)
change in quantity demanded of a good
d)
shift in the demand curve
6.
A change in the demand for apples could result from any of the following except
a)
a change in the number of buyers
b)
increased preferences for fresh fruit consumption for health reasons
c)
a change in the price of an apple
d)
a change in the price of a banana
7.
To access Internet services, consumers must use a computer. If computer prices fall, what is the effect on the demand for Internet services
a)
the demand for Internet services increases
b)
the demand for Internet services decreases
c)
The demand for Internet services remains unchanged
d)
The demand for Internet services could increase, decrease, or stay the same depending on other factors 
8.
Iceberg & romaine are two different types of lettuce. For most consumers, iceberg and romaine are 
a)
complements
b)
substitutes
c)
inferior goods
d)
resources
9.
If the demand for used cars decreases after the price of a new car falls, used cars and new cars are
a)
inferior goods
b)
substitute goods
c)
complementary goods
d)
normal goods
10.
If the demand for a good increases when people's incomes increase, 
a)
the good is an inferior good
b)
the law of demand is violated
c)
the good's demand curve must be upward sloping
d)
the good is a normal good
11.
Ramen noodles are a staple food item for many college students. Ramen noodles are very inexpensive, easy to prepare, and can be combined easily with other foods. After students graduate, find employment, and earn a higher income, they decrease their Ramen noodle purchases significantly. In this case, Ramen noodles are: 
a)
a normal good
b)
an inferior good
c)
a complement for higher income people
d)
none of these are correct
12.
If Mary used to buy 10 units at $4 each and now buys 15 units when the price is $4, her
a)
quantity demanded has increased
b)
quantity demanded has decreased 
c)
demand has increased
d)
demand has decreased
13.
The law of demand states that 
a)
price and quantity demanded are inversely related
b)
the larger the number of buyers in a market, the lower will be product price
c)
price and quantity demanded are directly related
d)
consumers will buy more of a product at high prices than at low prices
14.
When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes: 
a)
the cost effect
b)
the inflationary effect
c)
the income effect
d)
the substitution effect
15.
One of the reasons an increase in the price of a product will reduce the amount of it purchased ceteris paribus because
a)
supply curves are upward sloping
b)
the higher price means that real incomes have risen
c)
consumers will substitute other products for the one whose price has risen
d)
consumers substitute relatively high-priced for relatively low-priced products
16.
The income & substitution effects account for
a)
the upward sloping supply curve
b)
the downward sloping demand curve
c)
movements along a given supply curve
d)
the "other things equal" assumption
17.
When the price of Nike soccer balls fell, Ronaldo purchased more Nike soccer balls, and fewer Adidas soccer balls. Which of the following best explains Ronaldo's decision to buy more Nike soccer balls?
a)
the substitution effect
b)
the income effect
c)
an increase in the demand for Nike soccer balls
d)
the price effect
18.
If the demand for digital cameras increases when consumers' incomes rise, then digital cameras are
a)
a normal good
b)
an inferior good
c)
a substitute good
d)
a complement to video cameras
19.
Consider the market for cellular phones. Which of the following shifts the demand curve leftward? 
a)
studies showing using cellular phones can cause brain cancer
b)
a decrease in the price of cellular phones
c)
a decrease in the quantity demanded of cellular phones
d)
an increase in the services provided by cellular phones, such as text messaging
20.
What's the fundamental concept of economics? 
a)
money can't buy happiness but it can let you buy your own form of misery
b)
having money's not everything; not having it is
c)
anybody who thinks money will make you happy ain't got money
d)
you can print money but we're still limited by our resources #scarcity
21.

(A) If a person is willing to purchase a product but is not able to purchase it.

(B) If a person is able to purchase a certain quantity of a product but is not willing to purchase it.

a)

(A) is demand while (B) is not

b)

(B) is demand while (A) is not

c)

Both are considered as demand

d)

Both cannot be considered as demand

22.

Giffen Goods are those, the demand for which.

(Giffen good is a concept commonly used in economics, refers to a good that people consume more of as the price rises).

a)

Decreases with the fall in income

b)

Decreases with the rise in income

c)

Increases with the rise in income

d)

None of the above

23.

Demand can be defined as the quantity of a product that consumers are able and willing to purchase.

a)

Other things remain constant

b)

During a specified period of time provided

c)

At a particular price

d)

All of the above

24.

Pizza and a burger would be an example for;

a)

Complementary goods

b)

Both

c)

Substitute goods

d)

Neither

25.

Other things remaining the same, the amount demanded increases with a fall in price and diminishes with a rise in price.

a)

It is true for Law if Supply

b)

It is incorrect for the Law of Demand

c)

It is true for Law of Demand

d)

It is incorrect for the Law of Supply

26.

An example of substitute goods could be:

a)

Car and fuel

b)

Butter and jam

c)

Bread and butter

d)

Mobile phone and charging cable

27.

The example of goods of Snob Appeal would be;

(Snob Appeal means a quality that makes something attractive to people who are snobs).

a)

Buying a Ferrari

b)

Opening up a Bank Account

c)

Buying a Car Insurance

d)

Buying basic utilities

28.

Desire, Capacity and Willingness gives rise to _____________ .

a)

Need

b)

Want

c)

Demand

d)

All of the above

29.

An increase in the price of electricity bill will force you to:

a)

increase your demand for kerosene heaters and coal.

b)

increase your demand for light bulbs and aircon.

c)

increase your demand for stereos and videokes.

d)

increase your demand for TVs and use of gadgets.

30.

The market demand curve for apple shows the;

a)

effect on market supply of a change in the demand for apple.

b)

quantity of an apple that consumers like to buy at different prices.

c)

marginal cost of producing and selling different quantities of an apple.

d)

effect of advertising expenditures on the market price of an apple.

31.

If the demand for a good increases when people's incomes increase,

a)

the good is an inferior good

b)

the law of demand is violated

c)

the good's demand curve shifts to the left

d)

the good is a normal good

32.

When the price of a product increases, a consumer is able to buy less of it. Which effect does this describe?

a)

Cost Effect

b)

Inflationary Effect

c)

Income Effect

d)

Substitution Effect

33.

Consider the market for cellular phones. Which of the following shifts the demand curve to the left?

a)

studies showing using cellular phones can cause brain cancer

b)

a decrease in the price of cellular phones

c)

a decrease in the quantity demanded of cellular phones

d)

an increase in the services provided by cellular phones, such as text messaging

34.

Which of these best describes the law of demand?

a)

if prices go up, quantity demanded will fall and if prices go down, quantity demanded will go up

b)

if prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down

c)

there is no law of demand, each situation is unique and demand and prices cannot be predicted

d)

prices will go up for certain goods when quantity demanded goes up and vice versa

35.

The graph represents which concept of demand

a)

Change in Price

b)

Decrease in Demand

c)

Change in Quantity Demand (Slide)

d)

Change in Demand (Shift)

36.

The price of coffee increases and people switch to drinking tea. The determinant of demand is

a)

Income

b)

Price of Related Goods (Complements)

c)

Consumer Preferences/Tastes

d)

Price of Related Goods (Substitutes)

37.

Identify which determinant of demand (Shifter) is involved: Kohl's Black Friday sales are approaching.

a)

Population

b)

Complementary goods

c)

Consumer expectations

d)

Consumer tastes or preferences

38.

What is the only factor that causes a change in quantity demanded (Slide) along a demand curve?

a)

population

b)

income

c)

price

d)

tastes and preferences

39.

When the price of hot dogs decreases and the demand for hot dog buns increases, this explains the demand of

a)

Complementary goods

b)

Capital Goods

c)

Substitute Goods

d)

Consumer Goods

40.

Goods for which demand goes down as income goes up are better known as

a)

Inferior Goods

b)

Normal Goods

c)

Public Goods

d)

Private Goods

41.

A new study has shown that avocados are extremely healthy. The demand for avocados has increased due to a change in

a)

Population

b)

Price of Substitute Good

c)

Price of Complementary Good

d)

Consumer Preferences/Tastes

42.

The desire to have some good or service and the ability to pay for it

a)

supply

b)

equilibrium

c)

demand

d)

quantity demanded

43.

Thousands of people leave a small town due to a factory closing down. Sales at the local stores drop. What causes this change?

a)

Prices or availability of substitutes

b)

Prices or availability of complementary goods

c)

Change in Preferences

d)

Change in Population

44.

The law of demand states that

a)

price and quantity demanded are inversely related

b)

the larger the number of buyers in a market, the lower will be product price

c)

price and quantity demanded are directly related

d)

consumers will buy more of a product at high prices than at low prices

45.

If the price of gas goes up and total revenue goes up, what does that say about the elasticity of gas?

a)

Gas is Elastic

b)

Gas is Inelastic

c)

Gas is Unitary Elastic

46.

According to the Total Revenue Test for elastic demand, as prices go ____________, total revenue goes _____________.

a)

Up; Up

b)

Down; Up

c)

Up; Down

d)

Down; Down

47.

Your favorite snack has a sudden price increase of $2. You are forced to settle for a substitute cheaper snack. The demand for your favorite snack is

a)

Inelastic

b)

Elastic

c)

Unitary Elastic

d)

Ceteris Paribus

48.

When consumers react to an increase in a good's price by consuming less of that good and more of other goods.

a)

Cost Effect

b)

Income Effect

c)

Substitution Effect

d)

Inflationary Effect

49.

Which concept of demand does the graph represent?

a)

Change in Price

b)

Change in Demand (Shift)

c)

Decrease in Demand

d)

Change in Quantity Demand (Slide)

50.

Means the ability and willingness to purchase an item or service

a)

supply

b)

resources

c)

demand

d)

order

51.

the part of economic theory that deals with behavior and decision making by individual units, such as people and firms

a)

macroeconomics

b)

microeconomics

c)

general economics

d)

neutral economics

52.

demand involves which of these variables

a)

ingredients

b)

market

c)

season

d)

price

53.

shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time

a)

demand schedule

b)

demand table

c)

demand curve

d)

demand response

54.

A graph showing the quantity demanded at each and every price that might prevail in the market

a)

demand schedule

b)

demand table

c)

demand curve

d)

demand response

55.

states that the quantity demanded varies inversely with its price.

a)

law of conservation

b)

law of gravity

c)

law of balance

d)

law of demand

56.

the amount of usefulness or satisfaction that someone gets from the use of a product

a)

market

b)

utility

c)

elasticity

d)

cromulence

57.

the principle which states that the extra satisfaction we get from using additional quantities of the product begins to decline

a)

diminishing returns

b)

externalities

c)

law of demand

d)

diminishing marginal utility

58.

An increase in income means people can afford to buy more at all possible prices

a)

Substitutes

b)

consumer tastes

c)

consumer income

d)

expectations

59.

Consumers sometimes change their minds about the products they buy

a)

Substitutes

b)

consumer tastes

c)

consumer income

d)

expectations

60.

items that can be used in place of other products

a)

expectations

b)

number of consumers

c)

complements

d)

substitutes

61.

Related goods

a)

expectations

b)

number of consumers

c)

complements

d)

substitutes

62.

The way that people think of the future can affect demand.

a)

expectations

b)

number of consumers

c)

complements

d)

substitutes

63.

The market demand curve can change if there is a change in the number of consumers.

a)

expectations

b)

number of consumers

c)

complements

d)

substitutes

64.

a general measure of responsiveness or the important cause and effect relationship in economics.

a)

substitution

b)

diminishing returns

c)

rationality

d)

elasticity

65.

When a given change in price causes a relatively larger change in quantity demanded, the item is said to be

a)

unit elastic

b)

elastic

c)

rubbery

d)

inelastic

66.

When a given change in price causes a relatively small change in the quantity demanded, the item is said to be

a)

unit elastic

b)

elastic

c)

rubbery

d)

inelastic

67.

A given change in price causes a proportional change in quantity demanded, the item is said to be

a)

unit elastic

b)

elastic

c)

rubbery

d)

inelastic

68.

the amount that consumers spend on a product at a particular price

a)

marketability

b)

resource charge

c)

market price

d)

total expenditures

69.

Which of the following is NOT a determinant of demand elasticity?

a)

Will the purchase make me happy?

b)

Can a purchase be delayed?

c)

Are adequate substitutes available?

d)

Does the purchase use a large portion of income?

70.
If you keep buying despite a price increase, your demand is
a)
elastic.
b)
strong.
c)
normal.
d)
inelastic.
71.
A demand curve illustrates the
a)
differences in price charged by different stores.
b)
quantities demanded at each price by consumers.
c)
differences in demand for different products.
d)
products that are most in demand.
72.
Substitutes are goods
a)
that are bought and used together.
b)
used in place of one another.
c)
that cannot be replaced.
d)
that cause a shift in the demand curve.
73.
A drop in price will
a)
increase the quantity demanded of goods.
b)
decrease the quantity demanded of goods.
c)
not affect the quantity demanded of goods.
d)
change the law of demand.
74.
A measure of how consumers react to a change in price is known as the
a)
elasticity of demand.
b)
law of demand.
c)
income effect.
d)
demand curve.
75.
When factors other than price cause demand to fall, the demand curve
a)
does not shift.
b)
shifts to the left.
c)
shifts upward.
d)
shifts to the right.
76.
For most goods, a rise in people's income means that there will be a(n)
a)
substitution effect.
b)
rise in prices.
c)
increase in demand.
d)
decrease in demand.
77.
Which of the following is determined by dividing the percent change in quantity demanded by the percent change in price?
a)
demand curve
b)
law of demand
c)
income effect
d)
elasticity
78.
Which of the following describes the substitution effect
a)
As the price of a good falls, people will substitute other products.
b)
As the price of a good rises, people will substitute other products.
c)
As demand rises, people will substitute other products.
d)
As demand falls, people will substitute other products.
79.
Which of the following is an example of a good with inelastic demand?
a)
television sets
b)
computers
c)
a particular brand of chewing gum
d)
life-saving medicine
80.

If a firm knows that the demand for its product is inelastic what will happen if they raise prices?

a)

make the demand for the product elastic.

b)

increase total revenue.

c)

have no effect.

d)

decrease total revenue.

81.
Which of the following is NOT an example of complements?
a)
skis and ski boots
b)
rowboats and oars
c)
electric shaver and charging cord
d)
calculator and cell phone
82.
If the elasticity of demand for a good at a certain price is greater than one, we describe demand as
a)
elastic.
b)
unitary elastic
c)
variable.
d)
inelastic.
83.
The substitution effect and the income effect
a)
only apply to normal goods.
b)
affect how consumers change their spending patters.
c)
only apply to inferior goods.
d)
allow economists to measure consumption
84.

An oil refinery fire could cause the price of gas to __

a)

increase

b)

decrease

c)

stabilize

d)

fluctuate wildly

85.

A product may be amazing, but unless people can actually afford it, it's not really in deman.

a)

True

b)

False

86.

The basic problem of economics is ___.. we just don't have the resources to take care of ALL of our wants/needs!

a)

opportunity cost

b)

diminishing marginal utility

c)

purchasing power

d)

scarcity

87.

When prices rise for a particular product, consumers will purchase lower-priced similar items..

a)

income effect

b)

substitute effect

c)

diminishing marginal utility

d)

law of demand

88.

As prices for a product decrease, demand for a product should increase..

a)

diminishing marginal utility

b)

elasticity

c)

income effect

d)

law of demand

89.

The more of a product that you consume, the less satisfaction the consumer enjoys..

a)

income effect

b)

diminishing marginal utility

c)

demand elasticity

d)

purchasing power

90.

The more money that a person makes, the more they are willing to spend..

a)

diminishing marginal utility

b)

substitute effect

c)

total revenue

d)

income effect

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