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If the price of good X becomes lower, then the level of consumer surplus becomes
Correct answer(s):
- higher
Consumer surplus is
Correct answer(s):
- the value consumers get from a good but do not pay for.
The demand function
Correct answer(s):
- recognizes that the quantity of a good consumed depends on its price and demand shifters.
If consumers expect future prices to be higher
Correct answer(s):
- stockpiling will happen when products are durable in nature.
Which of the following statements is incorrect?
Correct answer(s):
- none of the statements associated with this question are incorrect.
Advertising can influence demand by altering tastes of consumers. This type of advertising is known as
Correct answer(s):
- persuasive advertising.
Advertising provides consumers with information about the underlying existence or quality of a product. These types of advertising messages are called
Correct answer(s):
- informative advertising.
Firms advertise in order to cause the demand for their products to
Correct answer(s):
- shift to the right.
Which of the following are least likely to be complements?
Correct answer(s):
- Cars and trucks.
Good Y is a complement to good X if an increase in the price of good Y leads to
Correct answer(s):
- a decrease in the demand for good X.
Which of the following are least likely to be substitutes?
Correct answer(s):
- Automobile and gasoline.
Suppose that good X is a substitute for good Y. Then an increase in the price of good Y leads to
Correct answer(s):
- an increase in the demand of good X.
An inferior good is a good
Correct answer(s):
- that consumers purchase less of when their incomes are higher.
Suppose good X is a normal good. Then a decrease in income would lead to
Correct answer(s):
- an outward shift of the demand curve.
Which of the following is least likely to be a normal good?
Correct answer(s):
- Bologna
Good X is a normal good if an increase in income leads to
Correct answer(s):
- an increase in the demand for good X.
Changes in the price of other goods lead to
Correct answer(s):
- a change in demand.
Demand shifters do not include
Correct answer(s):
- the price of the good.
The law of demand states that if the price of a good falls and all other things remain the same, the
Correct answer(s):
- quantity demanded of the good rises.
Suppose both supply and demand decrease. What effect will this have on price?
Correct answer(s):
- It will rise.