Microeconomics Practice Questions: Demand

there is an inverse relationship between price and quantity demanded.

A downward-sloping demand curve implies:

b

A shift of the demand curve for fried chicken would NOT be caused by a change in: A. income B. the price of fried chicken C. the price of hot dogs D. the popularity of fried chicken

a network effect

Antonio has a cell phone, and his service provider is AT&T. When he calls his wife, Erika, who is also an AT&T customer, he does not have to pay for those minutes. The more AT&T customers there are in the market, the greater the benefit Antonio receives. This is:

demand for smoothies to increase

If yoghurt and smoothies are substitutes in consumption, then a rise in the price of yoghurt will cause the:

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?

complements

Spaghetti and salad are related goods. Holding everything else constant, if the price of spaghetti decreases and the demand for salad increases, spaghetti and salad are probably:

b

Shifts in market demand can result from a change in A. the cost of production for an item B. the type and number of buyers C. the number of producers of an item in the market D. the price of a product

consumer expectations

The demand for bottled water decreases at a time when people believe bottled water prices will soon fall. The change in demand is most likely attributable to a change in:

quantity demanded increases (goes along the demand curve)

What will happen to the demand graph when the price falls?

an increase in demand (shift to the right)

What would happen to the demand curve if an advertisement for a product is successful?

decrease in demand (shift to the left)

What would happen to the demand curve in this scenario: A hotel in Cape Cod, Massachusetts, is completely booked during August. However, in September, tourism drops significantly and some hotel rooms remain empty.

c

Which factor will NOT cause an increase in the demand for shoes? A. an increase in the popularity of shoes, as adventurous new styles of shoe become fashionable B. an increase in income, assuming shoes are a normal good C. a decrease in the price of shoes D. a decrease in income, assuming shoes are an inferior good

a

Which of the following is not a demand shifter? A. The price of the product B. The price of a complementary good C. The price of a substitute good D. The number of buyers in the market

c

Facebook is subject to network effects because: A. its value is determined only by its marginal private benefit. B. it yields negative externalities. C. its value to an individual increases when the number of other people using it increases. D. its value to an individual declines when the number of other people using it increases.

The demand for Gucci shoes will shift to the right today.

How will the demand for Gucci shoes change today, if the government decides to tax designer shoes next year?

a decrease in demand

Macaroni and cheese is an inferior good. If students' incomes at your college increase, the effect on macaroni and cheese consumption will be:

a decrease in demand

Steak is a normal good. If students' incomes at your college decrease, the effect on steak consumption will be:

b

If ramen noodles are an inferior good, then an increase in income will lead to a: A. movement down along the demand curve for ramen noodles. B. leftward shift of the demand curve for ramen noodles. C. rightward shift of the demand curve for ramen noodles. D. movement up along the demand curve for ramen noodles.

b

Which statement is CORRECT? A. A change in quantity demanded and a change in demand are movements along the demand curve. B. A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve. C. A change in quantity demanded and a change in demand are shifts of the demand curve. D. A change in demand is a movement along the demand curve, and a change in quantity demanded is a shift of the demand curve.

it slopes downward due to the law of demand

Why does the demand curve slope downwards?

a

In much of the country, car owners choose to operate their vehicles using gasoline or electricity, both of which are normal goods. Which factor would cause an increase in the demand for gasoline? A. an increase in consumer incomes B. an increase in the price of gasoline C. a decrease in the price of electricity D. a decrease in consumer incomes

a decrease

An increase in the price of shoes would probably result in _____ in the demand for shoelaces.

a

Assuming that iPhones are normal goods, which factor will NOT increase the demand for iPhones? A. lower prices for Samsung smartphones B. an increase in the incomes of iPhone users C. the price of laptop computers increasing D. cool new computer games that can only be played on iPhones

d

Jane goes to an all-you-can-eat restaurant and makes three trips to the buffet. After finishing food from her third trip, she felt sick and throws up. Which of the following economic explanations best matches Jane's situation? A. Jane's marginal benefit from her third trip to the buffet was larger than her marginal benefit from her second trip. B. Jane's marginal benefit from eating the third place was positive but less than that of the second plate C. Jane was charged extra for the third plate at the buffet. D. Jane's marginal benefit from eating the third plate was negative.

decrease in quantity demanded (movement along demand curve)

What would happen to the demand graph if the price increases?

a

Which of the following scenarios illustrates the law of demand? A. Kathleen eats more steak when the price is low, and less when the price is high. B. 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. 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. Francis does not care about the price of coffee at the coffee shop - he must buy two cappuccinos every day, regardless of the price.

d

Which statement BEST explains the law of demand? A. As income rises, more cars are purchased, assuming cars are a normal good. B. As the price of corn rises, more corn is sold. C. As the population rises, more electricity is consumed. D. As the price of computers rises, fewer computers are purchased.