Question

1. a change in quantity demanded is represented by

a. substitution.
c. a movement along the demand curve.
b. a shift of the demand curve.
d. complements.

1. the shift in the graph shows that the quantity demanded of butter decreased because

a. the price of margarine decreased.
c. the price of margarine increased.
b. the price of butter decreased.
d. the price of butter increased.

1. which economic concept is defined as the measure of how responsive consumers are to a price change?

a. consumer expectation
c. decreasing marginal utility
b. elasticity of demand
d. consumer taste

1. which of the following describes a demand curve?

a. it slopes downward from left to right.
c. it slopes downward from right to left.
b. it is bow - shaped.
d. it is a horizontal line.

1. rice is what you’ll probably end up with these days if your local mcdonald’s is in indonesia. with the collapse of the indonesian currency, the rupiah, in 1998, potatoes...have quintupled in price. that means rice is turning with an increasing frequency as an alternative to the french fry.... it’s not hard to fathom why fries are an endangered menu item says jack greenberg, ceo of mcdonald’s: “no one can afford them.”

source: reprinted from december 14, 1998 issue of business week, by special permission, copyright © 1998 by the mcgraw - hill companies, inc.
based on this passage, mcdonald’s is serving rice in its indonesian restaurants because of
a. a decrease in the price of a complement.
c. a decrease in price of a substitute.
b. an increase in the price of a substitute.
d. an increase in the price of a complement.

1. an actress sets off a craze for wearing camouflage clothing among her fans. what factor is affecting demand?

a. substitutes
c. consumer tastes
b. consumer expectations
d. complements

1. when demand is inelastic, how does the change in quantity demanded compare to the change in price?

a. the change for both is equal.
b. the change in quantity demanded is less than the change in price.
c. neither quantity demanded nor price change.
d. the change in quantity demanded is greater than the change in price.

Explanation:

• Question 9: A change in quantity demanded due to price change is shown by movement along the demand - curve. A shift of the demand curve is for non - price factors. Substitution and complements are related to non - price changes in demand.
• Question 10: Butter and margarine are substitutes. A decrease in the price of margarine makes it more attractive, reducing the demand for butter.
• Question 11: Elasticity of demand measures consumer responsiveness to price changes.
• Question 12: A demand curve slopes downward from left to right due to the law of demand (more is demanded at lower prices).
• Question 13: Potatoes (a substitute for rice) increased in price, making rice more attractive.
• Question 14: An actress influencing fans to wear camouflage is a change in consumer tastes.
• Question 15: In inelastic demand, the change in quantity demanded is less than the change in price.

Answer:

1. c. a movement along the demand curve
2. a. the price of margarine decreased
3. b. elasticity of demand
4. a. It slopes downward from left to right
5. b. an increase in the price of a substitute
6. c. consumer tastes
7. b. The change in quantity demanded is less than the change in price