Unit 2 AP MicroEcon

According to the Law of Demand, what happens to the quantity demanded of a good or service when the price increases?

• The quantity demanded increases.

• The quantity demanded stays the same.

• The quantity demanded decreases.

• The price of the good or service decreases.

What is the relationship between price and quantity demanded as stated by the Law of Demand?

• Directly proportional

• Inversely proportional

• Not related

• Only related during economic crises

Does a change in price of the exact product shift the demand curve?

• Yes, it shifts the demand curve.

• No, it moves along the existing curve.

• Yes, it creates a new demand curve.

• No, it eliminates the demand curve.

What do you use to create a demand curve?

• A demand reaction table

• A demand schedule

• A supply schedule

• A price list

What happens to the demand for a substitute good when the price of its alternative increases?

• The demand for the substitute good decreases.

• The demand for the substitute good increases.

• The demand for the substitute good remains unchanged.

• The demand for the substitute good is not related to the price of its alternative.

What is the relationship between complementary goods?

• Complementary goods have independent demands.

• Complementary goods have opposite demands.

• Complementary goods have joint demand.

• Complementary goods are not related in terms of demand.

What does the Law of Supply state about the relationship between price and quantity supplied?

• The quantity supplied decreases as the price increases.

• The quantity supplied is not affected by the price.

• The quantity supplied increases as the price decreases.

• The quantity supplied increases as the price increases.

Which factor does NOT shift the supply curve?

• A change in the cost of production.

• A change in the price of the exact product.

• An increase in demand for the product.

• Any factor other than the price of the product.

What measures the strength of the consumer response to a change in the price of a product?

• Law of Supply

• Price Elasticity of Demand

• Complementary goods demand

• Substitute goods demand

When calculating the elasticity of demand, what should be done with negative numbers?

• Negative numbers should be squared

• Negative numbers should be used as they are

• Negative numbers should be dropped

• Negative numbers should be converted to positive using absolute value