QUIZ 2 DEMAND

1. Which of the following is considered a determinant of Demand?

a) Availability of the product
b) Changes in the prices of other, related goods
c) Changes in the cost of delivery of products
d) The level of Indirect Tax (e g. VAT or purchase tax) on a product.

2. The figure relates to the marginal utility gained by a consumer from the consumption of a good.
At what quantity will total utility be maximized?

Quantity Marginal
Utility
1 80
2 100
3 120
4 100
5 80
6 60
7 40
8 20
9 0
10 -20

a) 2
b) 3
c) 9
d) 10
3. The substitution effect of a price change indicates
a) That all products have substitutes
b) Price changes for a particular product after relative prices of other products
c) Demand will fall during periods of inflation
d) Assuming money income is constant, a price change will alter real income
4. The income effect of a price change indicates
a) Demand will fall during periods of inflation
b) Assuming money income is constant a price change will alter real income
c) Changes in income effect the position of demand curve
d) Falling prices make people worse off.
5. Which of the following explains why the demand curve for a good typically slopes down from
left to right?
a) Consumers experience an increase in marginal utility as they consume more goods
b) AS more is demanded the price of a good tends to fall
 c) Production costs increases with output, making demand fall as output increases
d) The combined influence of income and substitution effect of a price change
6. What might cause demand curve for a normal good to shift to the right?
a) A fall in price of a substitute
b) A fall in price of a complement
c) A fall in consumers incomes
d) A fall in price of a product
7. What might cause demand curve for a normal good to shift to the left?
a) A rise in consumers incomes
b) A fall in price of a substitute
c) A fall in price of a complement
d) A fall in price of a product
8. If there is an increase in consumers income, and demand for a good falls, the good is defined as :
a) A Veblen good
b) A normal good
c) An inferior good
d) A complementary good
9. If there is an increase in price of a good X, and the demand for good Y falls, the goods are
identified as:
a) Inferior Goods
b) Complementary Goods
c) Substitutes Goods
d) Normal Goods
10. If the price of a resource increases and the demand contracts the effect may be referred to as:
a) The incentive effect of a price increase
b) The wealth effect of a price increase
c) The rationing effect of a price increase.
d) The impact of law of diminishing returns
11. Normally a demand curve will have the shape:
a) Horizontal
b) Vertical
c) Downward Sloping
d) Upward Sloping
12. Law of demand shows relation between:
a) Income and price of commodity
b) Price and quantity of a commodity
c) Income and quantity demand
d) Quantity demanded and quantity supplied