Demand and the Law of Demand

Which of the following correctly describes a change in quantity demanded and a change in demand?

A change in quantity demanded is a response to a price change and a change in demand is a response to a non-price change Quantity demanded is the amount people want to buy at a specific price. When that price changes, so will the quantity demanded. Demand is how much people want to buy at all prices and changes when a determinant of demand changes.

All of the following will result in a shift in a demand curve except:

A change in the supply of a good Supply is not one of the five determinants of demand; a change in the supply of a good will not shift the demand curve.

The demand for Good X is given in the graph shown here. Which of the following could cause the shift of demand shown here? The demand for Good X

An increase in the number of buyers of a good An increase in demand is shows, and an increase in the number of buyers will increase the demand for a good.

Which of the following movements would represent an increase in the demand for a good?

From S to R At the same price, the quantity demanded for this good has increased, therefore this is an increase in demand.

Jeff is a rational consumer who spends his entire income on food and vacations. The table below describes his marginal utility and the prices of food and vacations. If the price of a vacation decreases to $300, which of the following best describes the income effect of this price change?

He now effectively has more disposable income, which he can spend on more vacations, more food, or both. The income effect is when a decrease in the price of a good increases a consumer's purchasing power and causes quantity demanded for a good to increase.

Pam considers t-shirts and gym classes to be complementary goods. How will Pam react if the price of gym classes increases?

Her quantity demanded of gym classes will decrease, and her demand for t-shirts will decrease. Based on the law of demand, we know that if the price of gym classes increases, then Pam's quantity demanded will decrease. If two goods are complements, then a decrease in the quantity of one causes a decrease in the demand for the other.

As a result of an increase in consumer incomes, the demand for Meeps has decreased. Based on this information, what can we definitely say about what type of good a Meep is?

It is an inferior good. When incomes decrease, the demand for an inferior good will increase.

Owen saw that the price of peaches had gone down, and so he decided to buy more peaches. Based on this information only, what does Owen's reaction reflect?

Owen's quantity demanded for peaches has increased. A change in quantity demanded is a change in the quantity that a buyer is willing to buy in response to a price change.

Something has changed about how consumers buy hats which resulted in the change shown in this graph. Figure 1: The demand for hats which of the following changes could this graph represent?

People do not like hats as much as they did before, so their demand has decreased When people like a good less, their tastes and preferences for it for it decrease, and so the demand for that good will decrease as represented by the decrease in demand shown.

Something has changed about how consumers buy hats, which has resulted in the change shown in the graph shown here. A graph with two demand curves Which of the following changes could this graph represent?

People do not like hats as much as they did before, so their demand has decreased When people like a good less, their tastes and preferences for it for it decrease, and so the demand for that good will decrease as represented by the decrease in demand shown.

The government of a small town is concerned about the litter created when people leave styrofoam cups used to serve large beverages on the ground. The government decides to tax these by implementing a $1 tax on these drinks. What is the most likely purpose of this tax?

Reduce the number of beverages sold in styrofoam cups When a good is taxed, the price that buyers pay for the good increases. Buyers will respond to the disincentive of a higher price by purchasing less and resulting in fewer cups left as litter.

Emily is a rational consumer who gets utility from socks and music lessons, and she considers both of these goods normal goods. Her marginal utility from socks is 50 utils and the price of socks is $5 per pair. Her marginal utility from music lessons is 600 utils and the price of music lessons is $60 If the price of music lessons falls to $20, which of the following best describes the income and substitution effects?

The income effect is that she now can spend more on both goods. The substitution effect is that the price of music lessons relative to socks has decreased so she will definitely buy more music lessons. The income effect is that for each music lesson she had purchased before, she now has an extra $40 to spend on socks or on music lessons, so she might buy more of both. The substitution effect is that the relative price of music lessons to socks has decreased from $60/$5 to $20/$5

According to the law of demand, what happens when the price of a robotic sandwich stuffer decreases?

The quantity demanded of robotic sandwich stuffers increases. The law of demand suggests that price and quantity demanded change in opposite directions. When the price of a good decreases, its quantity demanded increases.

Justin is a rational consumer who spends his entire income on guitar strings and jasmine tea, both of which he considers normal goods. The table below describes his marginal utility and the prices of guitar strings and jasmine tea. If the price of guitar strings decreases to $2, which of the following best describes how the substitution effect will impact how he allocates his budget?

The relative prices of guitar strings and jasmine tea have changed, guitar strings becoming relatively cheaper. He will now purchase more of the relatively cheaper guitar strings. The substitution effect is about changes in the relative prices of a good. When the price of a good decreases, it is now relatively cheaper than it used to be and consumers will substitute toward purchasing more of that good.

A government is concerned about whether young children in a community are receiving enough healthcare. Which of the following is the LEAST likely to increase the amount of healthcare that people provide their children?

increase the price of healthcare If you increase the price of healthcare, it might induce more sellers to provide it, but it also discourages buyers from buying it.

Meeps and Blops are two goods that are related to each other. When the price of Meeps goes down, the demand for Blops goes down. Based only on the information given here, what kind of goods are Meeps and Blops? Choose 1 answer:

substitutes When the price of one good decreases, people will tend to buy more of that good, lowering the demand for substitute goods.

Which of the following best describes a change in quantity demanded and a change in demand?

ΔQd​ , is a movement along a curve and ΔD is a movement of the entire curve. As price changes, the value of quantity demanded will change in response to that price, moving to a new point on a demand curve. The entire curve reacts to a non-price change, such as a change in income or expectations.