AICE ECON: Unit 2

What does demand refer to in economic terms?

• The ability to sell goods at high prices

• The quantity of goods a company produces

• The different quantities of goods that consumers are willing and able to buy at different prices

• The need for companies to increase prices

According to the Law of Demand, what is the relationship between price and quantity demanded?

• Direct

• Inverse

• Constant

• Unrelated

What does the Law of Demand state about the relationship between price and quantity demanded?

• As price rises, quantity demanded rises

• As price falls, quantity demanded remains constant

• As price falls, quantity demanded rises

• As price rises, quantity demanded remains constant

According to the Law of Demand, what happens to quantity demanded when price falls?

• It falls

• It rises

• It remains unchanged

• It becomes unpredictable

What is the effect on quantity demanded when the price of a good increases, as per the Law of Demand?

• Quantity demanded increases

• Quantity demanded decreases

• Quantity demanded does not change

• Quantity demanded doubles

What does the term "Demand Schedule" refer to in economics?

• A list of inventory items in a warehouse

• A timetable for manufacturing products

• A table showing the relationship between price and quantity demanded

• A government document regulating prices

According to the demand schedule in the image, how many units would be demanded if the price is $1.00?

• 5 units

• 10 units

• 15 units

• 20 units

What might happen to the quantity demanded as price decreases from $10.00 to $0.05?

• It decreases

• It remains constant

• It increases

• It fluctuates

What are the three behavior patterns that explain the Law of Demand?

• The Substitution effect, The Income effect, The Law of Diminishing Marginal Utility

• The Substitution effect, The Price effect, The Utility Maximization

• The Demand curve, The Supply effect, The Income effect

• The Market effect, The Income effect, The Law of Diminishing Marginal Utility

What does the substitution effect in economics refer to?

• The change in demand due to a change in technology.

• The change in demand due to a change in consumer preferences.

• The change in demand due to a change in the price of a substitute good.

• The change in supply due to a change in production costs.