Supply & Demand Vocabulary Quiz

Explanation
If a person buys the same amount of a good when their income changes, it suggests that their demand for the good is not affected by changes in income. This indicates that the good is a neutral good, meaning that it is neither inferior (where demand decreases as income increases) nor normal (where demand increases as income increases).

Explanation
If a person's income and demand change in the same direction (both go up or both go down), the good is called a normal good. This means that as a person's income increases, their demand for the good also increases, and vice versa.

Explanation
When income and demand go in different directions, it means that as income increases, the demand for the good decreases. This indicates that the good is a lower-quality or cheaper alternative compared to other goods available in the market. Therefore, the correct answer is "Inferior Good."

Explanation
When two goods are considered complements, it means that they are consumed together. Complementary goods are often used in conjunction with each other, such as peanut butter and jelly or shampoo and conditioner. The consumption of one good enhances the consumption of the other, and they are seen as being mutually beneficial.

Explanation
Substitutes are goods that can be used as alternatives to each other. In this example, when the price of coffee increases, people may choose to buy tea instead, as it is a similar beverage that can fulfill their caffeine needs. This shows that the increase in the price of one good (coffee) leads to an increase in the demand for its substitute (tea).

Explanation
The correct answer is "Law of Supply & Demand." This law states that as the price of a good increases, the quantity demanded decreases. It is a fundamental principle in economics that explains the relationship between the availability of a product (supply) and the desire for that product (demand). When the price of a good increases, consumers are less willing or able to purchase it, leading to a decrease in demand. This law helps to explain how prices are determined in a market economy.