Consumer Demand Quiz Questions

A demand curve is a graphic representation of the relationship between the price of a good and the quantity of that good that consumers are willing to buy. It shows the quantity demanded at different price levels, with a downward sloping line indicating that as the price decreases, the quantity demanded increases. The demand curve helps to illustrate the law of demand, which states that as the price of a good decreases, the quantity demanded increases, and vice versa. It is an essential tool in understanding consumer behavior and market dynamics.

A change in the quantity demanded (movement along the demand curve) is the result of a change in the price charged for a product. This is because the price of a product directly affects the quantity demanded by consumers. When the price of a product increases, the quantity demanded generally decreases, and vice versa. Therefore, a change in the price charged for a product will cause a movement along the demand curve, reflecting a change in the quantity demanded.

Complements are two goods that are bought and used together. They have a strong relationship, where the demand for one good increases the demand for the other. For example, peanut butter and jelly are complements - when the demand for peanut butter increases, so does the demand for jelly. Therefore, the given answer "Complements" accurately describes goods that are bought and used together.

The given correct answer is "Substitution effect." This term refers to the behavior of consumers when they respond to a price increase of a particular good by substituting it with another similar good. In other words, when the price of one good rises, consumers tend to switch their demand to a substitute good that offers a similar function or utility at a lower price. This phenomenon is a key concept in economics and helps explain how consumers make choices based on relative prices and preferences.

The correct answer is "Substitute good." When the price of Converse increased, Ariel decided to start buying airwalks instead. This suggests that airwalks are considered a substitute for Converse, meaning they serve a similar purpose and can be used as an alternative.

The term "demand" refers to the quantity of a product that consumers are willing and able to purchase at a specific price and within a specific timeframe. It implies that consumers have both the desire (willingness) and the financial capacity (ability) to buy the product. This answer accurately captures the essential elements of demand, emphasizing the importance of both willingness and ability to make a purchase.

The Law of Demand states that when prices increase, demand will decrease, and when prices decrease, demand will increase. This principle is based on the idea that consumers tend to buy less of a good or service as its price rises, and vice versa. The Law of Demand is a fundamental concept in economics and helps to explain the inverse relationship between price and quantity demanded.

An inferior good is a type of good for which the demand decreases as the consumer's income increases. This means that as the consumer becomes wealthier and can afford higher-quality goods, they will choose to purchase substitutes or higher-quality alternatives instead of the inferior good. This is because the consumer perceives the inferior good as lower quality or less desirable compared to other options available to them. Therefore, the demand for an inferior good will decrease as income increases.

The given scenario states that Sarah was able to afford filling up an entire room with her favorite body lotion because she obtained a $65,000 a year job. This implies that as her income increased, she was able to purchase more of the body lotion, indicating that it is a normal good. A normal good is a type of product for which demand increases as consumer income rises.

The factors that affect elasticity include the availability of substitutes, whether the product is a need or a luxury, and the amount of time the consumer has to react to a price change. Availability of substitutes is important because if there are many alternatives to a product, consumers are more likely to switch to a cheaper option if the price increases. Whether a product is a need or a luxury also affects elasticity because consumers are more likely to be price-sensitive for necessities compared to luxury items. Additionally, the amount of time consumers have to react to a price change is important as it determines their ability to adjust their purchasing decisions.

If a small change in price (2%) leads to a relatively larger change in quantity demanded (8%), it indicates that the demand for the product is elastic. This means that consumers are highly responsive to changes in price, and a slight increase or decrease in price can have a significant impact on the quantity demanded.

A normal good is a type of good for which the demand increases as the consumer's income increases. This means that as the consumer's income rises, they are willing and able to purchase more of the normal good. This is in contrast to an inferior good, for which the demand decreases as the consumer's income increases. The concept of normal goods is an important aspect of understanding consumer behavior and the relationship between income and demand.

The income effect refers to the change in quantity demanded of a good due to a change in consumer's real income. When the price of a good increases, consumers' purchasing power decreases, causing them to feel poorer. As a result, they may reduce their demand for the good, leading to a decrease in quantity demanded. This phenomenon is known as the income effect.

When people desire more of a product regardless of price, it indicates an increase in demand for the product. This increase in demand causes a shift of the product's demand curve to the right (outward). This shift signifies that at any given price, consumers are willing to buy a larger quantity of the product. The shift to the right shows that there is a higher demand for the product, even at the same price levels.

If demand for a product is elastic, it means that the quantity demanded is highly responsive to changes in price. Therefore, if there is a price increase, the quantity demanded will fall. This is because consumers are sensitive to price changes and will be less willing to purchase the product at a higher price. As a result, the product's total revenue will also decline because the decrease in quantity demanded outweighs the increase in price.

Zach's cell phone bill has increased by over 25% in the last 4 years, but his demand for cell phone services has only increased. This indicates that Zach's demand for cell phones is inelastic. Inelastic demand means that the quantity demanded is not very responsive to changes in price. In this case, even though the price of the cell phone services has increased, Zach's demand has remained relatively unchanged. This suggests that Zach is not very sensitive to changes in price and is willing to pay the higher price for the cell phone services he desires.

Catelyn's demand for gasoline is elastic because she has chosen to walk to school instead of using her Hummer due to the increase in gas prices. This suggests that Catelyn is sensitive to changes in the price of gasoline and is willing to change her behavior (in this case, walking instead of driving) in response to the price increase.

The elasticity of demand for the candy bars is 0.20. This means that for every 1% increase in price, the quantity demanded decreases by 0.20%. In this case, when the price of the candy bars increased by 25% (from $1.00 to $1.25), the quantity demanded decreased by 20% (from 100 to 80). This indicates that the demand for the candy bars is relatively inelastic, as the change in price had a smaller effect on the quantity demanded.

The correct answer is A because the demand curve represents the relationship between price and quantity demanded. The vertical axis of the demand curve represents the price, while the horizontal axis represents the quantity demanded. Therefore, point A on the demand curve represents the axis where price goes.

A change in prices does not cause a shift in the demand curve because it is represented by movements along the demand curve, not a shift of the entire curve. Changes in prices result in changes in quantity demanded, but the demand curve itself is determined by factors such as income, tastes and advertising, consumer expectations, and population.

not-available-via-ai

Elasticity of demand measures the responsiveness of buyers to changes in price. It indicates how much the quantity demanded of a good will increase or decrease when the price of that good changes. A high elasticity of demand means that buyers are very responsive to price changes, while a low elasticity means that buyers are less responsive. Therefore, the concept of elasticity of demand is the most appropriate explanation for the given statement.

The correct answer is B. This point represents the quantity axis, as it is located on the vertical axis of the demand curve. The quantity axis represents the quantity of a good or service being demanded at different price levels.

At a price of $4.00 for Subway foot long sandwiches, the quantity demanded is 10 per month. This means that at this price, consumers are willing to purchase 10 sandwiches every month.

The given scenario provides information about the change in price and the corresponding change in quantity demanded of "flat bill" hats. To calculate elasticity, we can use the formula: elasticity = (% change in quantity demanded) / (% change in price). In this case, the % change in quantity demanded is ((5-10)/10) * 100 = -50%, and the % change in price is ((45-30)/30) * 100 = 50%. Therefore, the elasticity is (-50% / 50%) = -1, which falls within the range of unitary elasticity. This means that the change in price has led to an equal percentage change in quantity demanded.