AP Econ - module 5

Explain whether each of the following events represents (i) a change in demand (a shift of the demand curve) or (ii) a movement along the demand curve (a change in the quantity demanded). a. A store owner finds that customers are willing to pay more for umbrellas on rainy days.

a. The quantity of umbrellas demanded is higher at any given price on a rainy day than on a dry day. This is a rightward shift of the demand curve, since at any given price the quantity demanded rises. This implies that any specific quantity can now be sold at a higher price.

Which of the following will increase the demand for disposable diapers? a. a new "baby boom" b. concern over the environmental effect of landfills c. a decrease in the price of cloth diapers d. a move toward earlier potty training of children e. a decrease in the price of disposable diapers

a. a new "baby boom"

A decrease in the price of butter would most likely decrease the demand for a. margarine. b. bagels. c. jelly. d. milk. e. syrup.

a. margarine.

Explain whether each of the following events represents (i) a change in demand (a shift of the demand curve) or (ii) a movement along the demand curve (a change in the quantity demanded). b. When XYZ Telecom, a long-distance telephone service provider, offered reduced rates on weekends, its volume of weekend calling increased sharply.

b. The quantity of weekend calls demanded rises in response to a price reduction. This is a movement along the demand curve for weekend calls.

Explain whether each of the following events represents (i) a change in demand (a shift of the demand curve) or (ii) a movement along the demand curve (a change in the quantity demanded). c. People buy more long-stem roses the week of Valentine's Day, even though the prices are higher than at other times during the year.

c. The demand for roses increases the week of Valentine's Day. This is a rightward shift of the demand curve.

3. If an increase in income leads to a decrease in demand, the good is a. a complement. b. a substitute. c. inferior. d. abnormal. e. normal.

c. inferior.

Which of the following will occur if consumers expect the price of a good to fall in the coming months? a. The quantity demanded will rise today. b. The quantity demanded will remain the same today. c. Demand will increase today. d. Demand will decrease today. e. No change will occur today.

d. Demand will decrease today.

Explain whether each of the following events represents (i) a change in demand (a shift of the demand curve) or (ii) a movement along the demand curve (a change in the quantity demanded). d. A sharp rise in the price of gasoline leads many commuters to join carpools in order to reduce their gasoline purchases.

d. The quantity of gasoline demanded falls in response to a rise in price. This is a movement along the demand curve.

Which of the following would increase demand for a normal good? A decrease in a. price. b. income. c. the price of a substitute. d. consumer taste for a good. e. the price of a complement.

e. the price of a complement.