Demand

Question 1

Demand is the quantity of a good that consumers are:

Accepted Answer

Willing and able to buy at each price — Demand requires both the willingness and the ability to buy at each price.

Question 2

According to the law of demand, as price rises, quantity demanded:

Accepted Answer

Falls — The law of demand states that a higher price leads to a lower quantity demanded.

Question 3

A normal demand curve slopes:

Accepted Answer

Downward from left to right — Because quantity demanded falls as price rises, the demand curve slopes downward.

Question 4

A change in the price of a good itself causes:

Accepted Answer

A movement along the demand curve — A change in the good's own price is shown by a movement along the demand curve.

Question 5

A fall in the price of a good leads to an:

Accepted Answer

Extension in demand — A lower price increases quantity demanded, an extension along the curve.

Question 6

Which of the following shifts the demand curve to the right?

Accepted Answer

A rise in consumer incomes (normal good) — Higher incomes raise demand for a normal good, shifting the curve right.

Question 7

Coffee and tea are substitutes. A rise in the price of coffee will:

Accepted Answer

Increase demand for tea — If coffee becomes dearer, consumers switch to tea, raising demand for tea.

Question 8

Cars and petrol are complements. A large fall in the price of cars will:

Accepted Answer

Increase demand for petrol — Cheaper cars mean more cars used, increasing the demand for the complement petrol.

Question 9

Which factor is a non-price cause of a shift in demand?

Accepted Answer

Consumer tastes — A change in tastes is a non-price factor that shifts the whole demand curve.

Question 10

Wanting a good but being unable to pay for it is:

Accepted Answer

Not demand in economics — Demand requires ability to pay, so a want without payment is not demand.