Question 1

According to the Law of Demand, what happens to the quantity demanded of a good when its price increases, all else being equal?

Accepted Answer

The quantity demanded decreases.

Question 2

Which of the following best describes the demand schedule?

Accepted Answer

A table that lists pairs of prices and quantities demanded for a good.

Question 3

In a perfectly competitive market, demand relates to the behavior of which group?

Accepted Answer

Buyers/consumers

Question 4

Which of the following is NOT an explanation for the Law of Demand?

Accepted Answer

Price effect

Question 5

Suppose the price of a product increases from $$10 to 15$$, and as a result, the quantity demanded falls from 40 units to 25 units. Which concept does this scenario best illustrate?

Accepted Answer

Law of Demand

Question 6

If the demand curve for a good is downward sloping, which of the following statements is true?

Accepted Answer

As price decreases, quantity demanded increases.

Question 7

Which of the following best explains the substitution effect?

Accepted Answer

When the price of a good rises, consumers switch to cheaper alternatives.

Question 8

A demand schedule shows that at a price of $$20, the quantity demanded is 10,000 units. If the price falls to 10$$, and the quantity demanded rises to 24,000 units, what does this illustrate?

Accepted Answer

Movement along the demand curve

Question 9

Which of the following is a correct mathematical representation of the Law of Demand?

Accepted Answer

$$ Q_d = f(P) $$ where $$ \frac{dQ_d}{dP} \u003c 0 $$

Question 10

If a new technology makes it easier for consumers to compare prices, leading to more elastic demand, what is likely to happen to the slope of the demand curve?

Accepted Answer

The demand curve becomes flatter.

Question 11

Which of the following real-world scenarios best illustrates the income effect?

Accepted Answer

When the price of gasoline falls, people can afford to drive more and buy more goods overall.

Question 12

If the demand for a product is represented by the equation $$ Q_d = 50 - 2P $$, what is the quantity demanded when the price is $10?

Accepted Answer

$$ Q_d = 20 $$

Question 13

Which of the following statements is true regarding the demand curve in a perfectly competitive market?

Accepted Answer

It is downward sloping.

Question 14

A city government increases the price of public transportation. According to the Law of Demand, what is the most likely outcome?

Accepted Answer

The quantity demanded for public transportation will decrease.

Question 15

If the price of a good falls and consumers respond by buying more of it, which effect(s) could be responsible?

Accepted Answer

Both the substitution and income effects

The Basics of Demand in Microeconomics

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