Practice Questions
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If the price of coffee increases, and as a result, the quantity demanded for tea increases, what does this indicate about the relationship between coffee and tea?
When coffee gets more expensive, people might buy more tea instead. Other options are incorrect because Some might think that if one item costs more, ...
If the price of a luxury car increases by 10% and, as a result, the quantity demanded decreases by 20%, what type of demand does this indicate?
Elastic demand means that when prices go up, people buy much less. Other options are incorrect because Inelastic demand means people buy almost the sa...
How does a decrease in price affect consumer surplus when the demand for a product is elastic?
When the price goes down and demand is elastic, more people want to buy the product. Other options are incorrect because Some might think that a lower...
If the price of good A increases, leading to an increase in the quantity demanded of good B, what does this indicate about the relationship between goods A and B in terms of cross-price elasticity?
When the price of good A goes up, people look for alternatives. Other options are incorrect because Complements are goods that are used together; A lu...
How does an increase in consumer income typically affect consumer spending on luxury goods, considering the income effect and its implications as an economic indicator?
When people earn more money, they often buy more luxury items. Other options are incorrect because Some might think that more income means less spendi...
How does an increase in the price of a non-essential good typically affect consumer spending on that good?
When prices go up for things we don't need, people usually buy less. Other options are incorrect because Some might think higher prices mean people sp...
If the price of a popular brand of sneakers increases by 10% and the quantity demanded decreases by 20%, what is the price elasticity of demand for these sneakers?
The price elasticity of demand is 2. Other options are incorrect because This answer suggests a very high sensitivity; This answer implies that demand...
Which of the following factors is most likely to significantly affect consumer spending behavior?
When people earn more money, they can buy more things. Other options are incorrect because Some might think that a celebrity's popularity can change w...
A local farmer raises the price of his organic potatoes from $2 to $3 per pound. He notices that while some customers buy less, his overall revenue from potato sales has increased. Which of the following best explains this scenario regarding consumer behavior and price elasticity?
The demand for organic potatoes is inelastic. Other options are incorrect because This option suggests that people stop buying when prices rise; This ...
A local grocery store raises the price of potatoes by 20%. As a result, the total revenue from potato sales increases. Which category best describes the demand for potatoes in this scenario?
Inelastic demand means people will buy about the same amount even if the price goes up. Other options are incorrect because Elastic demand means peopl...
In the relationship between price changes and consumer spending, if A represents a scenario where the price of a necessity increases leading to higher total revenue, and B represents inelastic demand, then C, where the price of a luxury good increases without a significant drop in quantity sold, would correspond to what concept?
Inelastic demand means that people will buy about the same amount even if the price goes up. Other options are incorrect because Elastic demand means ...
If the price of a staple food item, such as potatoes, increases significantly but total consumer spending on potatoes also rises, what can be inferred about the demand for potatoes?
When the price goes up but people still spend more, it means they really need potatoes. Other options are incorrect because This answer suggests that ...
Arrange the following steps to explain the effect of an increase in price on total consumer spending when demand is inelastic: A) Price increases, B) Quantity demanded decreases, C) Total consumer spending increases, D) Demand is considered inelastic.
When prices go up, people still buy almost the same amount if demand is inelastic. Other options are incorrect because This order suggests that we thi...
If the price of a necessity like bread increases and demand is inelastic, what is likely to happen to total consumer spending?
When the price of something we need goes up, we still buy it. Other options are incorrect because Some might think that higher prices mean we buy less...
Which of the following statements accurately describe the relationship between price elasticity of demand and consumer spending? Select all that apply.
Other options are incorrect because This statement is incorrect; This is not true....
When demand is inelastic, an increase in price will lead to an increase in _____ because the percentage increase in price exceeds the percentage decrease in quantity demanded.
When prices go up and demand is inelastic, people still buy almost the same amount. Other options are incorrect because Some might think higher prices...
If the price of a necessity like bread increases and demand is inelastic, what happens to total consumer spending on bread?
When the price goes up and demand is inelastic, people still buy bread. Other options are incorrect because Some might think that spending goes down w...
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