Quiz 2

Question 1

The law of demand states that consumers buy more of a good when its price declines:

Answer 1

Provided all else remains constant

Question 2

The distinction between demand and quantity demanded is best made by saying that:

Answer 2

Demand is represented graphically by a curve and quantity demanded as a point in that curve

Question 3

Suppose farmers can use their land to grow either wheat or corn. The law of supply predicts that an increase in the market price of wheat will cause:

Answer 3

Farmers to increase the production of wheat and to to reduce the production of corn

Question 4

Suppose a market has an excess demand and price starts to rise. What will the rise in price cause ?

Answer 4

A rise in quantity supplied and a fall in quantity demanded