Econ_WQ_Chapter 3 Part A_Law of Demand

The law of demand says that when a good's price is lower, the ____ is greater. As a result, the law of demand is an example of an inverse relationship.

• quantity supplied

• substiution effect

• quantity demanded

• income effect

The demand curve line always slopes downward.

• True

• False

Match the following

• income effect

• An increase in income typically results in lower quantity demanded of these goods.

• Normal Good

• An increase in purchasing power typically results in a increase in consumption of goods and services.

• Inferrior Good

• An increase in income typically results in higher quantity demanded of these goods.

• substitution effect

• Takes place when a consumer reacts to a rise in the price of one good by consuming less of that good and more of a similar product or service.

The law of demand refers to the amount of a product that someone is ____ and ___ to buy over arange of price points.

• willing

• unable

• able

• unwilling

"Ceteris paribus" means demand will change when price changes

• no matter what other factors may influence the market.

• if other market factors remain constant.

• only if the supply also does not change.

• only in the short-term.

The increasing age of the American population is an example of how

• changing demographics can cause demand shifts.

• the law of ceteris paribus works.

• lack of substitutes can blunt demand shifts.

• demand does not always change when prices change.

Which of the following is the best example of substitute for movie tickets?

• Inferior goods

• Jewelry

• Takeout pizza

• Rentals of on-demand programming

Shana continues to buy a necessary medicine even though prices for the medicine rise sharply. Shana's behavior shows how

• the passage of time affects elasticity.

• the law of demand eliminates elasticity.

• luxury goods are not subject to elasticity.

• demand for necessities is inelastic.

Suppose demand for a product is highly elastic. What will likely happen to a company's total revenue if it raises the price of that product?

• Total revenue will rise.

• Total revenue will fall.

• Total revenue will remain the same.

• Total revenue will fluctuate.

Suppose the price of a good rises. In general, how does the percentage of your budget you spend on that good affect the elasticity of your demand for goods overall?

• The higher the percentage of your budget a good represents, the less elastic your overall demand.

• The higher the percentage of your budget a good represents, the more elastic your overall demand.

• The lower the percentage of your budget a good represents, the more inelastic your overall demand.

• The lower the percentage of your budget a good represents, the more elastic your overall demand.