Law Of Demand Quiz Questions With Answers
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Looking for the law of demand practice quiz questions with answers? You have reached the right place. Take this quiz and test your knowledge regarding demand-supply. Law of demand is a basic principle of economics. This quiz is designed to check your understanding of the basic principles of demand. For instance, the law of demand, the demand curve, the factors that affect demand, and the elasticity of demand. So, play this demand quiz and make your memory sharp.
- 1.
According to ____________, when price decreases, demand rises, and when price increases, demand falls.
- A.
The Law of Diminishing Marginal Utility
- B.
Adam Smith
- C.
The Law of Demand
- D.
The elasticity of demand
Correct Answer
C. The Law of DemandExplanation
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.Rate this question:
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- 2.
______________ is the willingness to buy a product and the ability to pay for it.
- A.
Quantity
- B.
Demand
- C.
The Law of Demand
- D.
Elasticity
Correct Answer
B. DemandExplanation
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.Rate this question:
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- 3.
What kind of shift in demand does this graph show?
- A.
An increase in demand
- B.
A decrease in demand
- C.
Slightly increase in demand
- D.
Saturation point
Correct Answer
B. A decrease in demandExplanation
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.Rate this question:
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- 4.
What kind of shift in Demand does this graph show?
- A.
An increase in demand
- B.
A decrease in demand
- C.
Slightly decrease in demand
- D.
Saturation point
Correct Answer
A. An increase in demandExplanation
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.Rate this question:
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- 5.
Jen has just received a raise at her job, and as a result, she has stopped purchasing discounted clothing and has begun to shop at designer clothing stores. The discounted clothing that Jen has stopped purchasing is an example of what kind of good?
- A.
An inferior good
- B.
A normal good
- C.
A complementary good
- D.
A neutral good
Correct Answer
A. An inferior goodExplanation
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).Rate this question:
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- 6.
Tom was recently laid off from his job. His shortage of income has restricted him from buying jewelry for his wife. The jewelry that Tom can no longer afford is an example of what kind of good?
- A.
An inferior good
- B.
A normal good
- C.
A complementry good
- D.
A neutral good
Correct Answer
B. A normal goodExplanation
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.Rate this question:
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- 7.
PlayStation 3 and XBOX 360 are substitutes. If the price of PlayStation 3 increases what will happen to the quantity demanded for XBOX 360?
- A.
The quantity demand for XBOX 360 will decrease
- B.
The quantity demand for XBOX 360 will not change
- C.
The quantity demand for XBOX 360 will increase
- D.
The quantity demand for XBOX 360 will reach at a saturation point
Correct Answer
C. The quantity demand for XBOX 360 will increaseExplanation
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.Rate this question:
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- 8.
Milk and chocolate chip cookies are complementary goods. If the price of milk decreases what will happen to the quantity demanded for chocolate chip cookies?
- A.
The quantity demand for cookies will decrease
- B.
The quantity demand for cookies will not change
- C.
The quantity demand for cookies will increase
- D.
The quantity demand for cookies will reach at a saturation point
Correct Answer
C. The quantity demand for cookies will increaseExplanation
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.Rate this question:
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- 9.
Demand is ________ when a change in price leads to a relatively larger change in the quantity demanded. On the other hand, demand is __________ when a change in price leads to a relatively smaller change in the quantity demanded.
- A.
Increasing; decreasing
- B.
Decreasing; increasing
- C.
Elastic; inelastic
- D.
Inelastic; elastic
Correct Answer
C. Elastic; inelasticExplanation
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.Rate this question:
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- 10.
Increase in demand can occur due to which of the following?
- A.
Increase in price of the substitutes
- B.
Increase in income of the consumer
- C.
Decrease in price of the complementary good
- D.
All of these
Correct Answer
D. All of theseExplanation
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.Rate this question:
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Aug 21, 2023Quiz Edited by
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Sep 30, 2009Quiz Created by
Agdolan