Chapter 2: Demand: Thinking Like a Buyer

a) 145

Consider the table below. Assuming the law of demand holds, the cell labeled "?" could be which of the following quantities? a) 145 b) 165 c) 157 d) 159 e) 173

c. The demand for exercise machines and/or gyms will increase.

Recent evidence suggests exercise promotes longevity and reverses aging. Based on this information, what might happen in the market for exercise-related goods and services? a. The demand for gyms will not change. b. People will reduce their purchases of exercise equipment. c. The demand for exercise machines and/or gyms will increase. d. The demand for exercise equipment will not be affected.

d. Damien chooses to buy a sandwich for $5 when the marginal benefit of the sandwich to him is $7.

Which of the following scenarios depicts a rational buyer? a. Mary values a bag of salad at $2, but she buys the bag of salad even when the price is $4. b. John walks into a grocery store and purchases monthly groceries without paying attention to the prices of groceries. c. Darwin buys a can of shoe polish at $4.50 when his marginal benefit from it is $3.75. d. Damien chooses to buy a sandwich for $5 when the marginal benefit of the sandwich to him is $7.

a) a decrease in demand.

(Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point W to point P represents: a) a decrease in demand. b) an increase in quantity demanded. c) an increase in demand. d) an increase in quantity demanded.

d) an increase in quantity demanded.

(Figure: Graph) Refer to the graph to answer the question. The movement from point M to point N represents: a) an increase in demand. b) a decrease in quantity demanded. c) a decrease in demand. d) an increase in quantity demanded.

d. an increase in demand.

(Figure: Graph) Refer to the graph to answer the question. In the graph, the movement from point M to point Q represents a. a decrease in demand. b. a decrease in quantity demanded. c. an increase in quantity demanded. d. an increase in demand.

d. normal goods.

Holding all else constant, if people eat out more at expensive restaurants when they earn more, then expensive restaurant meals are a. goods with a congestion-effect. b. goods with a network-effect. c. inferior goods. d. normal goods.

b. The demand for other electric cars will fall.

If Tesla cars become less expensive, what will happen in the market for other electric cars? a. The quantity demanded of Teslas will fall. b. The demand for other electric cars will fall. c. The demand for other electric cars will rise. d. The quantity demanded of Teslas will not change.

a) goods related in such a way that an increase in price of one leads to a decrease in the demand for the other

Milk and cereal are an example of complementary goods. Which definition best describes this relationship? a) goods related in such a way that an increase in price of one leads to a decrease in the demand for the other b) goods related in such a way that an increase in price of one leads to an increase in the demand for the other c) goods related in such a way that an increase in quantity demanded of one leads to a increase in the price of the other d) goods related in such a way that an decrease in price of one leads to a decrease in the demand for the other

b. Survey some representative customers, find the total quantity demanded for those customers, scale up the quantities demanded to represent the entire market, and then plot the market demand curve.

What is the process that a manager can follow to estimate the total market demand for the United States? a. Survey one consumer, and then scale up that individual demand to represent the entire market, and plot the market demand curve. b. Survey some representative customers, find the total quantity demanded for those customers, scale up the quantities demanded to represent the entire market, and then plot the market demand curve. c. Survey representative customers, find the total quantity demanded for those representative customers, and then plot the market demand curve. d. Generate random data to represent market quantity demanded for the entire market, and then plot the market demand curve.

a. inferior goods.

Stores that are expected to perform better during recessions are those that sell a. inferior goods. b. normal goods. c. luxury goods. d. expensive goods.

Graph C

(Figure: Market for Printing Paper) Which of the following graphs illustrates what we expect to see in the market for printing paper if the price of printing paper rises?

Graph D

(Figure: Market for sugar) Stevia is a natural sweetener that is used as a sugar substitute. Which of the following graphs illustrates the impact of a rise in the price of Stevia on the demand for sugar?

b) is when buying an additional item yields a smaller marginal benefit than the previous item.

Diminishing marginal benefit: a) is when buying an additional item yields a larger marginal benefit than the previous item. b) is when buying an additional item yields a smaller marginal benefit than the previous item. c) is when consumers do not follow the rational rule. d) is not important in determining a consumer's purchase decision.

b) there is an inverse relationship between price and quantity demanded.

A downward-sloping demand curve implies: a) there is a positive relationship between price and quantity demanded. b) there is an inverse relationship between price and quantity demanded. c) there is no relationship between price and quantity demanded. d) buyers are willing to buy less when prices are lower.

a) a good for which higher income causes an increase in demand.

A normal good is: a) a good for which higher income causes an increase in demand. b) a good for which higher income causes a decrease in demand. c) a good which is only purchased by high-income consumers. d) a good which is normally purchased by many consumers.

c) keep buying a product until marginal benefit equals price.

A rational buyer will: a) buy the product only when the marginal benefit of consuming the product is twice as much as the price of the product. b) buy a product until the marginal benefit of consuming the product is less than the price of the product. c) keep buying a product until marginal benefit equals price. d) not consider costs versus benefits when purchasing a product.

c) that plots the quantity of an item that someone plans to buy, at each price.

An individual demand curve is a graph: a) that plots the quantity of an item that a seller plans to sell, at each price. b) that plots the market price of a product at different points in time. c) that plots the quantity of an item that someone plans to buy, at each price. d) that plots the quantity of an item that someone plans to buy, at one single price point.

Graph D

(Figure: Market for Apple Computers) Dell and Apple are competitors in the computer market. Which graph illustrates the effect of a rise in the price of Dell computers on the demand for Apple computers?

a. a tax cut on consumer income will lead to a rise in their demand.

For normal goods a. a tax cut on consumer income will lead to a rise in their demand. b. a tax cut on consumer income will lead to a fall in their demand. c. changes in consumer income do not affect their consumption. d. most consumers will choose to purchase the good regardless of income changes.

a) the demand for paintbrushes to decrease.

Paint and paintbrushes are complements. If the price of paint rises, we can expect: a) the demand for paintbrushes to decrease. b) the demand for paintbrushes to increase. c) the quantity demanded of paintbrushes to remain unchanged. d) the quantity demanded of paint to increase.

a) amount of a good that a person is willing to buy at each price.

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the: a) amount of a good that a person is willing to buy at each price. b) amount of a good that a person actually buys at the market price. c) amount of a good that a seller is willing to sell at a particular price. d) amount where opportunity cost is equal to the marginal benefit.

a. amount of a good that a person is willing to buy at each price.

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the: a. amount of a good that a person is willing to buy at each price. b. amount of a good that a person actually buys at the market price. c. amount of a good that a seller is willing to sell at a particular price. d. amount where opportunity cost is equal to the marginal benefit.

b. compares the benefit of buying an additional unit of the item to the cost of that item.

The Rational Rule for Buyers a. compares the total benefit of all units to the total price of all units purchased. b. compares the benefit of buying an additional unit of the item to the cost of that item. c. only applies to buyers who are buying necessities as opposed to luxury items. d. compares the cost of production of an item to the price of the item.

c. positive; when future prices are expected to rise, current demand will rise.

The relationship between price expectations and demand is a. negative; when future prices are expected to rise, current demand will fall. b. negative; when future prices are expected to fall, current demand will rise. c. positive; when future prices are expected to rise, current demand will rise. d. positive; future prices are generally expected to rise.

d) 148 cans

The table contains the monthly demand for soda cans for four students. If these four students make up the entire market, what is the total monthly market demand for soda at $1.50 per can? a) 125 cans b) 99 cans c) 45 cans d) 148 cans

d) Kathleen eats more steak when the price is low, and less when the price is high.

Which of the following scenarios illustrates the law of demand? a) A research company finds that the more expensive a particular brand of a designer handbag, the more that consumers are willing to purchase the brand. b) Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price. c) John likes to drink spring water. At $2 he buys four bottles of water, and at $1.50 he still buys four bottles of water. d) Kathleen eats more steak when the price is low, and less when the price is high.

b. a good whose demand decreases when income rises.

An inferior good is a. a good whose demand increases when income rises. b. a good whose demand decreases when income rises. c. an item that is only bought by rich people. d. an item that is purchased by very few people.

c. the inverse relationship between price and quantity demanded.

The law of demand refers to a. the positive relationship between price and quantity supplied. b. the inverse relationship between price and quantity supplied. c. the inverse relationship between price and quantity demanded. d. the positive relationship between price and quantity demanded.

c. the additional benefit from buying one more unit of that item.

The marginal benefit of consuming an item is a. the difference between what the consumer is willing to pay and the actual market price of the item. b. the total benefit from buying several units of the item. c. the additional benefit from buying one more unit of that item. d. the additional number of consumers who buy a unit of an item.