Demand in Economics: Definition, Factors, and Curve

Question 1

Describe the relationship between the price of a good and the quantity demanded.

Accepted Answer

Typically, there is an inverse relationship between price and quantity demanded. As the price increases, the quantity demanded generally decreases, and vice versa.

Answer

Price and quantity demanded tend to have a positive correlation, meaning that as price increases, quantity demanded also increases.

Answer

There is no consistent relationship between price and quantity demanded.

Question 2

What is the most accurate definition of demand in economics?

Accepted Answer

The desire, willingness, and ability of consumers to purchase a specific quantity of a good or service at a given price.

Answer

The total amount of a good or service that is available in the market.

Answer

The quantity of a good or service that consumers are willing to buy.

Question 3

If the price of a complementary good decreases, what is the likely effect on the demand for the original good?

Accepted Answer

An increase in demand for the original good.

Answer

A decrease in demand for the original good.

Answer

No change in demand for the original good.

Answer

An increase in the supply of the original good.

Question 4

How would a substantial increase in consumer income most likely impact the demand for luxury cars?

Accepted Answer

An increase in demand for luxury cars.

Answer

No change in demand for luxury cars.

Answer

A decrease in demand for luxury cars.

Question 5

According to the law of demand, what happens to the quantity demanded of a good as its price increases, assuming other factors remain constant?

Accepted Answer

It decreases.

Answer

It becomes unpredictable.

Answer

It remains unchanged.

Answer

It increases.

Question 6

What does a shift to the right on a demand curve represent?

Accepted Answer

An increase in demand.

Answer

A decrease in quantity demanded.

Answer

A decrease in demand.

Answer

An increase in quantity demanded.

Question 7

Which of the following is NOT a factor that can influence the demand for a good?

Accepted Answer

The cost of producing the good.

Answer

The price of related goods.

Answer

Consumer income.

Answer

Consumer preferences.

Question 8

A technological innovation enhances a product, making it more efficient and desirable. How would this likely affect the demand for the product?

Accepted Answer

An increase in demand.

Answer

A decrease in supply.

Answer

No change in demand.

Answer

A decrease in demand.

Question 9

When the price of a product decreases, consumers respond by purchasing significantly more of it. This indicates that the product has:

Accepted Answer

Relatively elastic demand.

Answer

Relatively inelastic demand.

Answer

Perfectly elastic demand.

Answer

Perfectly inelastic demand.

Question 10

Imagine a scenario where the price of a product increases, but the quantity demanded remains the same. This suggests that the demand for the product is:

Accepted Answer

Perfectly inelastic.

Answer

Perfectly elastic.

Answer

Relatively inelastic.

Answer

Relatively elastic.

Question 11

Which of the following is an example of a product with likely inelastic demand?

Accepted Answer

Essential medicine.

Answer

Fast food.

Answer

Concert tickets.

Answer

Jewelry.

Question 12

In microeconomics, what is the definition of demand?

Accepted Answer

The quantity of a good or service that consumers are willing and able to buy at a specific price.

Answer

The desire for a good or service.

Answer

The total amount of money consumers spend on a good or service.

Answer

The amount of a good or service that is available for purchase.

Question 13

Which of these is NOT a factor that influences demand?

Accepted Answer

Weather conditions

Answer

Consumer preferences

Answer

Consumer income

Answer

The price of the good

Question 14

What does a typical demand curve look like?

Accepted Answer

Downward sloping

Answer

Upward sloping

Answer

Horizontal

Answer

Vertical

Question 15

How does a change in price affect the quantity demanded of a good?

Accepted Answer

It causes a movement along the demand curve.

Answer

It changes the slope of the demand curve.

Answer

It has no effect on the quantity demanded.

Answer

It shifts the demand curve.

Question 16

Which of the following is a good example of a normal good?

Accepted Answer

Pizza

Answer

Public transportation

Answer

Generic brand medicine

Answer

Second-hand clothing

Question 17

What is the law of demand?

Accepted Answer

As the price of a good increases, the quantity demanded decreases, holding all other factors constant.

Answer

As the price of a good decreases, consumers tend to buy more of it, holding all other factors constant.

Answer

The demand curve is always upward sloping.

Question 18

What is the main purpose of a demand schedule?

Accepted Answer

To show the relationship between various prices and the corresponding quantities demanded.

Answer

To predict future demand for a good or service.

Answer

To determine the equilibrium price and quantity.

Question 19

Which of these is NOT a factor that influences demand?

Accepted Answer

Number of firms in the market

Answer

Consumer income

Answer

Price of related goods

Answer

Consumer tastes and preferences

Question 20

Why does the demand curve slope downwards?

Accepted Answer

Because as the price of a good rises, consumers tend to buy less of it.

Answer

Because producers tend to supply more of a good as its price rises.

Answer

Because the law of supply and demand always holds true.

Question 21

What is the concept of elasticity of demand?

Accepted Answer

A measure of how much consumers change their buying habits in response to a price change.

Answer

The ability of a good to be stored for a long time.

Answer

The amount of a good that consumers are willing to buy at a particular price.

Question 22

Which of the following factors would increase the elasticity of demand for a good?

Accepted Answer

The availability of close substitutes

Answer

The high income of consumers

Answer

The low price of the good

Answer

The addiction of consumers to the good

Question 23

What is the difference between a change in demand and a change in quantity demanded?

Accepted Answer

A change in demand is caused by a change in one of the determinants of demand, while a change in quantity demanded is caused by a change in the price of the good.

Answer

A change in demand is always larger than a change in quantity demanded.

Question 24

Which of the following is NOT a type of elasticity of demand?

Accepted Answer

Cross-price elasticity of income

Answer

Income elasticity of demand

Answer

Cross-price elasticity of demand

Answer

Price elasticity of demand

Question 25

What is the significance of the elasticity of demand for businesses?

Accepted Answer

It helps them determine how much revenue they will earn from a given price change.

Answer

It helps them predict future changes in consumer demand.

Answer

It helps them decide on the optimal level of output to produce.

Question 26

What is the relationship between elasticity of demand and total revenue?

Accepted Answer

Total revenue is maximized when the elasticity of demand is equal to 1.

Answer

Total revenue is always highest when the elasticity of demand is greater than 1.

Answer

Total revenue is always highest when the elasticity of demand is less than 1.

Question 27

Which of the following best defines the concept of demand in economics?

Accepted Answer

The quantity of a good or service that consumers are willing and able to buy at a given price and time period.

Answer

The amount of a good or service that producers are willing to sell at a given price.

Question 28

Assuming all else equal, what happens to the quantity demanded of a good when its price increases?

Accepted Answer

It decreases.

Answer

It becomes zero.

Answer

It stays the same.

Answer

It increases.

Question 29

Which of the following would NOT cause a shift in the demand curve for coffee?

Accepted Answer

A change in the price of coffee.

Answer

A successful advertising campaign promoting the health benefits of coffee.

Answer

A change in the price of tea, a substitute good.

Question 30

If consumer income increases, what is likely to happen to the demand for normal goods?

Accepted Answer

Demand will increase.

Answer

Demand will stay the same.

Answer

Demand will decrease.

Answer

Demand will become perfectly elastic.

Question 31

Which of these is NOT a factor that can shift the demand curve for a good?

Accepted Answer

The price of a key input used in production of the good.

Answer

The price of complementary goods.

Answer

Tastes and preferences of consumers.

Question 32

A decrease in the price of a good will lead to:

Accepted Answer

An increase in the quantity demanded.

Answer

A decrease in quantity supplied.

Answer

An increase in demand.

Question 33

If two goods are complements, an increase in the price of one good will lead to:

Accepted Answer

A decrease in the demand for the other good.

Answer

No change in the demand for the other good.

Answer

An increase in the quantity demanded of the other good.

Answer

An increase in the demand for the other good.

Question 34

Which of the following is an example of an inferior good?

Accepted Answer

Instant noodles, where demand decreases as income rises.

Answer

Sports cars, where demand increases as income rises.

Answer

Organic vegetables, where demand increases as income rises.

Question 35

A demand schedule shows:

Accepted Answer

The quantity of a good that consumers are willing and able to buy at different prices.

Answer

The relationship between price and quantity supplied.

Answer

The quantity of a good that producers are willing and able to sell at different prices.