Q: Suppose Sam observes that when the price of beer is $$12, the quantity demanded is 3 cases. If the price drops to 8$$, what is the percentage change in quantity demanded?

$$\frac{4-3}{3} \times 100\% = 33.3\%$$

Question 1

Sam owns a beer store and collects data on the price of a case of beer and the quantity demanded. According to the data, as the price decreases from $$16 to 4$$, the quantity demanded increases from 2 to 5 cases. What type of relationship does this illustrate between price and quantity demanded?

Accepted Answer

An inverse relationship

Question 2

In Sam's experiment, which variable is considered the independent variable when plotting the demand curve for beer?

Accepted Answer

Price

Question 3

When plotting the demand curve for beer, which axis should be labeled as 'Quantity Demanded'?

Accepted Answer

X-axis

Question 4

Given the following data for beer: Price ($$16, 12$$, $$8, 4) $$and Quantity Demanded (2, 3, 4, 5), what is the slope of the demand curve if you plot Price on the Y-axis and Quantity Demanded on the X-axis?

Accepted Answer

$$m = \frac{\Delta P}{\Delta Q} = \frac{16-4}{2-5} = \frac{12}{-3} = -4$$

Question 5

If Sam wants to predict how many cases of beer will be sold at a price of $10 using the demand data, which method should he use?

Accepted Answer

Interpolate using the demand curve

Question 6

Suppose the price of beer increases from $$8 to 12. $$According to the demand data, what happens to the quantity demanded?

Accepted Answer

It decreases

Question 7

Which of the following best describes the law of demand as illustrated by Sam's beer data?

Accepted Answer

As price decreases, quantity demanded increases

Question 8

If Sam's beer store sets the price at $4 per case, what is the expected quantity demanded according to the data?

Accepted Answer

5 cases

Question 9

Which of the following statements is true regarding the dependent variable in Sam's experiment?

Accepted Answer

The dependent variable is the quantity demanded

Question 10

If Sam wants to show the relationship between price and quantity demanded on a graph, which type of graph should he use?

Accepted Answer

Line graph

Question 11

Suppose Sam observes that when the price of beer is $$12, the quantity demanded is 3 cases. If the price drops to 8$$, what is the percentage change in quantity demanded?

Accepted Answer

$$\frac{4-3}{3} 	imes 100\% = 33.3\%$$

Question 12

If the demand curve for beer is linear and downward sloping, what does this imply about consumer behavior?

Accepted Answer

Consumers buy less beer as the price increases

Question 13

Which of the following is NOT a plausible reason for the inverse relationship between price and quantity demanded?

Accepted Answer

Law of supply

Question 14

If Sam wants to maximize total revenue, which price should he choose based on the data provided?

Accepted Answer

$$12 	imes 3 = 36$$

Question 15

If the price elasticity of demand for beer is calculated using the midpoint formula between $$P_1 = 12$, Q_1$ = 3$$ and $$P_2 = 8$, Q_2$ = 4$$, what is the elasticity?

Accepted Answer

$$\frac{(4-3)}{(4+3)/2} \div \frac{(8-12)}{(8+12)/2} = \frac{1}{3.5} \div \frac{-4}{10} = 0.286 \div -0.4 = -0.715$$

Question 16

If Sam observes that the demand curve for beer is steeper than for soda, what does this suggest about the price elasticity of demand for beer compared to soda?

Accepted Answer

Beer is less elastic than soda

Question 17

If Sam wants to increase the quantity demanded of beer, which of the following actions would be most effective?

Accepted Answer

Decrease the price

Question 18

Suppose Sam's beer store faces a market where the demand curve shifts to the right. What could be a possible cause?

Accepted Answer

Increase in population

Question 19

If the quantity demanded of beer is plotted against price and the resulting graph is a straight line, what does this indicate about the relationship?

Accepted Answer

The relationship is linear

Question 20

If Sam wants to use the data to forecast future sales, which economic concept is he applying?

Accepted Answer

Demand forecasting

Demand Curves and the Relationship Between Price and Quantity Demanded

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