1. The law of demand states that:
A.price and quantity demanded are inversely related.
B.the larger the number of buyers in a market, the lower will be product price.
C.price and quantity demanded are directly related.
D.consumers will buy more of a product at high prices than at low prices.


2. The demand curve shows the relationship between:
A.money income and quantity demanded.
B.price and production costs.
C.price and quantity demanded.
D.consumer tastes and the quantity demanded.


3.

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A decrease in demand is depicted by a:
A.move from point x to point y.
B.a shift from D1 to D2.
C.shift from D2 to D1.
D.move from point y to point x.



4.

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A decrease in quantity demanded (as distinct from a decrease in demand) is depicted by a:
A.move from point x to point y.
B.a shift from D1 to D2.
C.shift from D2 to D1.
D.move from point y to point x.



5. One reason that the quantity of a good demanded increases when its price falls is that the:
A.price decline shifts the supply curve to the left.
B.lower price shifts the demand curve to the left.
C.lower price shifts the demand curve to the right.
D.lower price increases the real incomes of buyers, enabling them to buy more.


6. Which of the following will not cause the demand for product K to change?
A.a change in the price of close-substitute product J
B.an increase in consumer incomes
C.a change in the price of K
D.a change in consumer tastes


7. Which of the following would not shift the demand curve for beef?
A.a widely publicized study that indicates beef increases one's cholesterol
B.a reduction in the price of cattle feed
C.an effective advertising campaign by pork producers
D.a change in the incomes of beef consumers


8. In 2000 the price of oil rose dramatically, which in turn caused the price of natural gas to increase. This can best be explained by saying that oil and natural gas are:
A.complementary goods and the higher price for oil increased the demand for natural gas.
B.substitute goods and the higher price for oil increased the demand for natural gas.
C.complementary goods and the higher price for oil decreased the supply of natural gas.
D.substitute goods and the higher price for oil decreased the supply of natural gas.


9. An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based on the assumption that:
A.there are many goods that are substitutes for bicycles.
B.there are many goods that are complementary to bicycles.
C.there are few goods that are substitutes for bicycles.
D.bicycles are normal goods.


10. Video cassette recorders and video cassettes are:
A.complementary goods.
B.substitute goods.
C.independent goods.
D.inferior goods.


11. If the demand curve for product B shifts to the right as the price of product A declines, then:
A.both A and B are inferior goods.
B.A is a superior good and B is an inferior good.
C.A is an inferior good and B is a superior good.
D.A and B are complementary goods.


12. If the price of product L increases, the demand curve for close-substitute product J will:
A.shift downward toward the horizontal axis.
B.shift to the left.
C.shift to the right.
D.remain unchanged.


13. Which of the following statements is correct?
A.An increase in the price of C will decrease the demand for complementary product D.
B.A decrease in income will decrease the demand for an inferior good.
C.An increase in income will reduce the demand for a normal good.
D.A decline in the price of X will increase the demand for substitute product Y.


14. A shift to the right in the demand curve for product A can be most reasonably explained by saying that:
A.consumer incomes have declined and they now want to buy less of A at each possible price.
B.the price of A has increased and, as a result, consumers want to purchase less of it.
C.consumer preferences have changed in favor of A so that they now want to buy more at each possible price.
D.the price of A has declined and, as a result, consumers want to purchase more of it.


15. Other things equal, which of the following might shift the demand curve for gasoline to the left?
A.the discovery of vast new oil reserves in Montana
B.the development of a low-cost electric automobile
C.an increase in the price of train and air transportation
D.a large decline in the price of automobiles


16. Last year, Sheila bought 10 DVD movies when her income was $40,000. This year, her income is $50,000 and she purchased 20 DVD movies. All else constant, it is obvious that
A.Sheila prefers DVD movies to VHS videos.
B.Sheila considers DVD movies to be a normal good.
C.Sheila considers DVD movies to be an inferior good.
D.Sheila has a price elastic demand for DVD movies


17. If consumers are willing to pay a higher price than previously for each level of output, we can say that that following has occurred:
A.a decrease in demand.
B.an increase in demand.
C.a decrease in supply.
D.an increase in supply.


18. A decrease in the demand for recreational fishing boats might be caused by an increase in the:
A.income of sports fishers.
B.price of outboard motors.
C.size and number of fish available.
D.price of sailing boats.


19. Assume that the demand schedule for product C is downsloping. If the price of C falls from $2.00 to $1.75:
A.a smaller quantity of C will be demanded.
B.a larger quantity of C will be demanded.
C.the demand for C will increase.
D.the demand for C will decrease.


20. An "increase in the quantity demanded" means that:
A.given supply, the price of the product can be expected to decline.
B.price has declined and consumers therefore want to purchase more of the product.
C.the demand curve has shifted to the right.
D.the demand curve has shifted to the left.



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