1. Which of the following is the clearest statement of the law of demand?

a. As income rises, people buy more of all goods and services

b. As price increases, the quantity of a good demanded will fall, assuming all other things are equal.

c. As price increases, demand falls.

d. Demand can never exceed supply.

e. The higher a person’s income, the greater the percentage of income saved.

2. There must necessarily have been an increase in the demand schedule for crude oil if:

a. The price of crude oil has risen

b. The price of crude oil has fallen

c. More oil can be sold at the same price

d. Less oil can be sold at the same price

e. Production of oil has increased

3. An increase in demand for a particular good will generally cause its demand curve to shift:

a. Downward and leftward

b. Upward and rightward

c. Only if the supply shifts

d. Only if the price changes

e. None of the above

4. A higher price for oil will, other things remaining the same, cause the demand curve for coal to:

a. Move to the left

b. Move to the right

c. Become a vertical line

d. Become a horizontal line

e. Remain unchanged.