Question 1

Which of the following best describes the law of demand?

Accepted Answer

As the price of a good rises, the quantity demanded of that good decreases, ceteris paribus.

Question 2

Suppose the price of bottled water increases from $$1.00 to 1.50 $$per bottle. According to the law of demand, what is the most likely outcome, all else equal?

Accepted Answer

The quantity demanded of bottled water decreases.

Question 3

Which of the following would cause a movement along the demand curve for coffee, rather than a shift of the demand curve?

Accepted Answer

A decrease in the price of coffee.

Question 4

If the price of a substitute good increases, what happens to the demand for the original good?

Accepted Answer

It increases.

Question 5

Which of the following scenarios would most likely cause the demand curve for pasta to shift to the left?

Accepted Answer

A decrease in consumer incomes, assuming pasta is a normal good.

Question 6

Suppose the number of buyers in the market for bottled water increases. What is the likely effect on the market demand curve?

Accepted Answer

The demand curve shifts to the right.

Question 7

Which of the following best distinguishes a change in demand from a change in quantity demanded?

Accepted Answer

A change in demand is caused by a change in a non-price determinant, while a change in quantity demanded is caused by a change in the price of the good.

Question 8

If the price of gasoline is expected to rise next month, what is the likely effect on the current demand for gasoline?

Accepted Answer

Current demand will increase.

Question 9

Which of the following equations represents the market demand if there are two consumers, A and B, whose individual demand functions are $$Q_A = 10 - 2P$$ and $$Q_B = 8 - P$$?

Accepted Answer

$$Q = 18 - 3P$$

Question 10

Which of the following would NOT cause a shift in the demand curve for bottled water?

Accepted Answer

A change in the price of bottled water.

Question 11

Suppose bottled water and sports drinks are substitutes. If the price of sports drinks falls, what happens to the demand for bottled water?

Accepted Answer

The demand for bottled water decreases.

Question 12

If pasta is an inferior good, what happens to the demand for pasta when consumer incomes rise?

Accepted Answer

The demand for pasta decreases.

Question 13

Which of the following is an example of a complement to coffee?

Accepted Answer

Sugar

Question 14

If the demand curve for a product shifts to the right, which of the following has most likely occurred?

Accepted Answer

Consumer incomes increased and the product is a normal good.

Question 15

Suppose the demand for bottled water is given by $$Q = 20 - 4P. If $$the price increases from $$2 to$$ $$3$$, what is the change in quantity demanded?

Accepted Answer

Decrease by 8 units

Question 16

Which of the following best describes the relationship between the price of a complement and the demand for a good?

Accepted Answer

If the price of a complement rises, the demand for the good decreases.

Question 17

A decrease in demand is represented by which of the following on a demand curve diagram?

Accepted Answer

A shift of the demand curve to the left.

Question 18

If Tina's demand for bottled water at $$P = 1.00 is 2 $$bottles per day and Tim's demand at the same price is 1 bottle per day, what is the market demand at $$P = 1.00$$?

Accepted Answer

3 bottles per day

Question 19

Which of the following is NOT a determinant of demand?

Accepted Answer

Price of the good itself

Microeconomics Study Notes: Demand in Competitive Markets

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