Demand

What is the law of demand in economics?

• Demand increases with price
• Demand decreases with price
• Demand is independent of price
• Demand is unrelated to quantity

Which factor is NOT a determinant of demand?

• Income
• Price of the good
• Tastes and preferences
• Number of sellers

If the price of a good rises and the quantity demanded rises, what type of good is it considered to be?

• Inferior
• Normal
• Giffen
• Veblen

What is the elasticity of demand?

• The percentage change in quantity demanded divided by the percentage change in price.
• The percentage change in price divided by the percentage change in quantity demanded.
• The total revenue divided by the quantity demanded.
• The percentage change in quantity supplied divided by the percentage change in price.

When cross-price elasticity of demand is positive, what does it indicate about the two goods?

• They are substitutes
• They are complements
• They are normal goods
• They are inferior goods

Which of the following is NOT a method to measure elasticity of demand?

• Arc elasticity
• Point elasticity
• Income elasticity
• Cross-price elasticity

What does the income elasticity of demand measure?

• The responsiveness of quantity demanded to a change in income.
• The responsiveness of quantity demanded to a change in price.
• The responsiveness of quantity supplied to a change in income.
• The responsiveness of price to a change in income.

When the percentage change in quantity demanded is less than the percentage change in price, demand is considered to be ____________.

• Elastic
• Inelastic
• Unitary
• Perfectly elastic

Which of the following is an example of a complementary good?

• Peanut butter and jelly
• Coffee and tea
• Cars and bicycles
• Butter and margarine

What happens to equilibrium price and quantity when both demand and supply increase?

• Price increases, quantity is indeterminate
• Quantity increases, price is indeterminate
• Both price and quantity increase
• Both price and quantity decrease