Law Of Demand Quiz Questions With Answers

The Law of Demand states that when the price of a product decreases, the demand for that product will increase, and when the price increases, the demand will decrease. This is based on the principle that consumers are more willing to purchase a product at a lower price, while they are less willing to purchase it at a higher price. The Law of Demand is a fundamental concept in economics and helps explain the relationship between price and demand in the market.

The graph shows an upward shift in demand. This means that there is an increase in the quantity demanded at every price level. It could be due to factors such as changes in consumer preferences, an increase in population, or an improvement in economic conditions. Overall, this indicates that there is a higher demand for the product or service represented by the graph.

Demand refers to the willingness and ability of consumers to purchase a product. It is a fundamental concept in economics that measures the desire for a good or service and the financial capacity to make a purchase. In other words, demand represents the consumer's intention to buy a product and their ability to pay for it. It is influenced by various factors such as price, income, preferences, and availability of substitutes. Understanding demand is crucial for businesses to determine the level of production and pricing strategies.

The graph shows a downward shift in the demand curve. This indicates a decrease in demand, meaning that consumers are now willing and able to purchase fewer quantities of the product at each price level. This could be due to factors such as a decrease in consumer income, a change in consumer preferences, or the availability of substitute products.

When two goods are substitutes, an increase in the price of one good typically leads to an increase in the demand for the other good. In this case, if the price of PlayStation 3 increases, consumers may be less willing to purchase it and instead opt for the cheaper alternative, which is the XBOX 360. As a result, the quantity demanded for XBOX 360 is expected to increase.

The discounted clothing that Jen has stopped purchasing after receiving a raise suggests that it is an inferior good. Inferior goods are those for which demand decreases as income increases. In this case, Jen's increase in income has led her to switch from purchasing discounted clothing (inferior good) to shopping at designer clothing stores (normal good).

An increase in demand can occur due to various factors, including an increase in the price of substitutes, an increase in the income of the consumer, and a decrease in the price of complementary goods. When the price of substitutes increases, consumers may switch to the original good, leading to an increase in demand. Similarly, an increase in consumer income allows them to afford more goods and services, resulting in higher demand. Additionally, a decrease in the price of complementary goods makes them more affordable, leading to an increase in demand for the original good. Therefore, all of these factors can contribute to an increase in demand.

The fact that Tom can no longer afford to buy jewelry for his wife suggests that jewelry is a normal good. Normal goods are those for which demand increases as income increases and decreases as income decreases. In this case, Tom's decrease in income has led to a decrease in his ability to purchase jewelry, indicating that it is a normal good for him.

When milk and chocolate chip cookies are complementary goods, it means that they are often consumed together. If the price of milk decreases, it becomes more affordable for consumers to purchase milk. This increase in affordability will likely lead to an increase in the quantity demanded for milk. As a result, consumers will also be more likely to purchase chocolate chip cookies to consume with the milk, leading to an increase in the quantity demanded for cookies as well.

When a change in price leads to a relatively larger change in the quantity demanded, it indicates that the demand is elastic. This means that consumers are highly responsive to price changes, and a small increase or decrease in price can result in a significant increase or decrease in the quantity demanded. On the other hand, when a change in price leads to a relatively smaller change in the quantity demanded, it indicates that the demand is inelastic. This means that consumers are not very responsive to price changes, and even significant changes in price have minimal impact on the quantity demanded.