Econ 201 Test 1 UPDATED ACTUAL
Questions and CORRECT Answers
The Law of Demand States - CORRECT ANSWER - price and quantity demanded are
inversely related
The relationship between quantity supplied and price is _____ and the relationship between
quantity demanded and price is _____. - CORRECT ANSWER - direct, inverse
When the price of a product falls, the purchasing power of our money income rises and thus
permits consumers to purchase more of the product. This statement describes - CORRECT
ANSWER - the income effect
When the price of a product rises, consumers shift their purchases to other products whose prices
are now relatively lower. This statement describes: - CORRECT ANSWER - the
substitution effect
If the demand curve for product B shifts to the right as the price of product A declines, then: -
CORRECT ANSWER - A and B are complementary goods.
A shift to the right in the demand curve for product A can be most reasonably explained by
saying that: - CORRECT ANSWER - consumer preferences have changed in favor of A so
that they now want to buy more at each possible price.
An increase in consumer incomes will - CORRECT ANSWER - increase the demand for a
normal good.
A decrease in the price of cameras will - CORRECT ANSWER - shift the demand curve
for film to the right
The law of supply - CORRECT ANSWER - reflects the amounts that producers will want
to offer at each price in a series of prices
Questions and CORRECT Answers
The Law of Demand States - CORRECT ANSWER - price and quantity demanded are
inversely related
The relationship between quantity supplied and price is _____ and the relationship between
quantity demanded and price is _____. - CORRECT ANSWER - direct, inverse
When the price of a product falls, the purchasing power of our money income rises and thus
permits consumers to purchase more of the product. This statement describes - CORRECT
ANSWER - the income effect
When the price of a product rises, consumers shift their purchases to other products whose prices
are now relatively lower. This statement describes: - CORRECT ANSWER - the
substitution effect
If the demand curve for product B shifts to the right as the price of product A declines, then: -
CORRECT ANSWER - A and B are complementary goods.
A shift to the right in the demand curve for product A can be most reasonably explained by
saying that: - CORRECT ANSWER - consumer preferences have changed in favor of A so
that they now want to buy more at each possible price.
An increase in consumer incomes will - CORRECT ANSWER - increase the demand for a
normal good.
A decrease in the price of cameras will - CORRECT ANSWER - shift the demand curve
for film to the right
The law of supply - CORRECT ANSWER - reflects the amounts that producers will want
to offer at each price in a series of prices
