Understanding the Forces of Demand

What does the law of demand state?

• As the price of a good increases, the quantity demanded increases.

• As the price of a good decreases, the quantity demanded remains unchanged.

• As the price of a good increases, the quantity demanded decreases.

• As the price of a good decreases, the quantity demanded increases.

What is a demand curve?

• A graph showing the relationship between the price of a good and the quantity supplied.

• A graph showing the relationship between the price of a good and the quantity demanded.

• A graph showing the relationship between two unrelated products.

• A graph showing the relationship between income and quantity demanded.

Which of the following is NOT a determinant of demand?

• Consumer preferences

• Technology

• Income of consumers

• Price of related goods

What causes a movement along the demand curve?

• A change in consumer income

• A change in the price of the good itself

• A change in the price of a substitute good

• A change in consumer tastes

What does a rightward shift in the demand curve indicate?

• A decrease in demand

• An increase in demand

• A decrease in the price of the good

• An increase in the price of the good

Which factor would cause the demand curve for a normal good to shift to the left?

• An increase in consumer income

• A decrease in the price of a substitute

• A decrease in consumer income

• An improvement in the technology used to produce the good

How does the expectation of future price increases affect current demand?

• It decreases current demand.

• It does not affect current demand.

• It increases current demand.

• It shifts the demand curve to the left.

What happens to the demand for a good when there is an increase in the price of a complement?

• Demand increases.

• Demand decreases.

• Demand remains unchanged.

• Demand becomes perfectly elastic.

If a good is considered a luxury, how would an increase in consumer income affect its demand curve?

• The demand curve would shift to the left.

• The demand curve would shift to the right.

• The demand curve would become steeper.

• The demand curve would become flatter.

What is the effect of a successful advertising campaign on the demand curve for the advertised product?

• The demand curve shifts to the left.

• The demand curve shifts to the right.

• The demand curve becomes more inelastic.

• The demand curve does not change, but the quantity demanded at each price increases.