Practice Questions
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What does a price elasticity of demand greater than 1 indicate about a good?
When the price elasticity of demand is greater than 1, it means that people buy a lot less of the good if the price goes up. Other options are incorre...
Which of the following scenarios would most likely lead to a decrease in the demand for a product, considering shifts in supply?
When the price of a substitute good goes down, people might buy that instead. Other options are incorrect because Some might think that if people have...
How does an increase in consumer income typically affect the equilibrium quantity of a normal good in a market, considering other factors affecting demand are constant?
When people have more money, they can buy more things. Other options are incorrect because Some might think that more income means less demand; It's a...
In a market where the demand for a product increases due to a rise in consumer income, how would this typically affect the equilibrium quantity if supply remains constant?
When more people want to buy a product, the amount sold goes up. Other options are incorrect because Some might think that more demand could lower sal...
How would an increase in consumer income affect the demand for luxury goods, and what would be the resulting impact on market equilibrium?
When people earn more money, they can buy more luxury items. Other options are incorrect because This option suggests that demand goes down, which is ...
What happens to the demand for a product when its price decreases, assuming all other factors remain constant?
When the price of a product goes down, more people want to buy it. Other options are incorrect because Some might think that lower prices mean less de...
What happens to the supply of a product when production costs decrease?
When it costs less to make something, companies can produce more of it. Other options are incorrect because Some might think lower costs mean less sup...
According to the law of demand, what happens to the quantity demanded of a good when its price decreases?
When the price of a good goes down, more people want to buy it. Other options are incorrect because Some might think that lower prices mean less deman...
In a market, when the price of a substitute good increases, the demand for the original good tends to __________.
When the price of a substitute goes up, people look for cheaper options. Other options are incorrect because Some might think that higher prices lead ...
If the price of a complementary good decreases, what is the likely effect on the demand for the original good?
When the price of a complementary good goes down, people buy more of it. Other options are incorrect because Some might think that a lower price of a ...
Demand is to quantity demanded as supply is to what?
Supply refers to how much of a product is available. Other options are incorrect because Some might think supply is linked to price; Market equilibriu...
A local bakery notices that when they increase the price of their bread, the quantity sold decreases significantly, but they also find that when the price of cookies decreases, more cookies are sold. How can the bakery use the concepts of demand and supply to adjust their pricing strategy?
Lowering the price of both bread and cookies can attract more customers. Other options are incorrect because Increasing cookie prices might scare cust...
If the price of a substitute good decreases, what is most likely to happen to the demand for the original good?
When the price of a substitute good goes down, people will buy more of that substitute. Other options are incorrect because Some might think that lowe...
Order the following steps to illustrate how a decrease in consumer income affects the demand for normal goods.
When people's income goes down, they have less money to spend. Other options are incorrect because This step happens after income decreases; Supply do...
Which of the following statements correctly describe how demand and supply interact in a market? (Select all that apply)
Other options are incorrect because Some might think that more demand always means higher prices; People may believe that more supply always raises pr...
If the price of a substitute good increases, what is likely to happen to the demand for the original good?
When the price of a substitute good goes up, people look for cheaper options. Other options are incorrect because Some might think that higher prices ...
A local bakery notices that when the price of bread increases, the quantity demanded decreases, and they also find that consumers are now buying more pastries instead. Which category best describes this situation?
When bread gets more expensive, people look for cheaper options. Other options are incorrect because Some might think that higher prices mean people h...
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