Econ Flashcards
Which of the following would be a correct statement of the Law of Demand?
As the price of a good decreases, the quantity demanded increases.
If the price of a good increases, and the quantity demanded decreases because it decreases the purchasing power of consumer’s income in the market, this is called…
The income effect
If the price of a good falls from $4 to $2, which of the following is a possible outcome?
the quantity demanded increases from 100 to 200
A change in demand means
All the answers are true
A and B on same line, arrow going down from A to B
All statements are true
Two different lines, A and C, A going to C
Consumers taste for oranges increases
Two different lines, Line A going to Line D
The price of apples, a substitute good for oranges, decreases.
Which of the following would NOT cause a shift in demand?
Changes in the price of a good.
Suppose that Goods A and B are complements. If the price of Good A increases, what can be said about the demand for Good B?
Demand for Good B will decrease.
Suppose that Goods C and D are substitutes for each other. If the price of Good C increases, what can be said about the demand for Good D?
The demand curve for Good D will shift to the right.
Suppose consumers believe that price of gas will increase in next month. What will be the effect on the demand for gas now?
Demand for gas will increase.
Which statements abt elasticity of demand is true?
All statements are true.
In market for chocolate, quantity demanded changes by 50% as price of chocolate changes by 33%. Demands for chocolate is…
Elastic
What is formula for total revenue?
Price x Quantity
If percentage change in quantity demanded for good is greater than percentage change in price, demand curve appears relatively flat, we would say that demand for that good is…
Elastic
