Question

1. According to the law of demand an increase in the price of Pepsi will (ceteris paribus):

		A)        increase the quantity demanded of Pepsi.
		B)        decrease the quantity demanded of Pepsi.
		C)        increase the demand for Pepsi.
		D)        decrease the demand for Pepsi.

3 points   

QUESTION 7

1. A change in the demand for beef will most likely be caused by a change in the:

		A)        price of beef.
		B)        price of pork.
		C)        cost of producing beef
		D)        technology used to produce beef

3 points   

QUESTION 8

1. If your favorite restaurant lowered its prices, how would the effect be shown correctly?

		A)        As an increase in the demand curve.
		B)        As a decrease in the demand curve.
		C)        As a movement downward along a demand curve.
		D)        As a movement upward along a demand curve.

3 points   

QUESTION 9

1. Which of the following would most likely result in an increase in the demand for orange juice?

		A)        A decrease in the supply of oranges.
		B)        A decrease in the cost of transporting oranges.
		C)        An increase in the price of grapefruit juice.
		D)        A decrease in the price of grapefruit juice.

3 points   

QUESTION 10

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

		A)        an increase in the quantity supplied of wheat as farmers substitute production of wheat for production of corn.
		B)        a decrease in the quantity supplied of corn as farmers substitute production of corn for production of wheat.
		C)        a decrease in the quantity supplied of wheat as farmers substitute production of corn for production of wheat.
		D)        an increase in the supply of wheat as farmers substitute production of wheat for the production of corn.

Answer 1

1. B. Decrease in the quantity demanded of Pepsi. It is a movement along the demand curve. A movement along the demand curve occurs when a change in quantity demanded is caused only by a change in price, and vice versa.

Question 7

b) Price of pork. Pork is substitute for beef. If price of substitute good falls, then demand for the concerned good falls. If the price of substitute good increases, then the demand for the concerned good increases.

c) Question 8

D. Upward movement along the demand curve.

Question 9

C. Grapefruit and orange juice are substitute. So if price of grapefruit increases, then demand for orange juice increases.

Question 10

C A decrease in the quantity supplied of wheat as corn is substituted for wheat.