The "law of demand" is illustrated by a

A) rightward shift of the demand curve.

B) leftward shift of the demand curve.

C) movement along the demand curve.

D) Both answers A and B are correct.

Pizza is a normal good. When the price of a pizza decreases from $14 to $12,

A) the income effect means people buy less pizza.

B) the income effect means people buy more pizza.

C) the quantity demanded of pizza will not change.

D) None of the above answers is correct.

If the price of an apple increases from 50 to 60, the quantity demanded will decrease because of

A) the substitution effect only.

B) the income effect only.

C) a change in income.

D) the substitution and income effects.

When the price of an inferior good falls, the substitution effect leads to ________ in the quantity purchased and the income effect leads to ________ in the quantity purchased.

A) an increase; an increase

B) an increase; a decrease

C) a decrease; an increase

D) a decrease; a decrease

The negative slope of the demand curve indicates that there is ________ relationship between the price and the quantity demanded.

A) a direct

B) an inverse

C) a positive

D) no relationship

Which of the following increases the demand for a normal good?

A) a decrease in income

B) an decrease in the price of a substitute

C) an increase in the price of a complement

D) The price of the good is expected to increase in the future.

The "law of supply" refers to the fact that, all other things remaining the same, when the price of a good rises

A) the supply curve shifts leftward.

B) the supply curve shifts rightward.

C) there is a movement up along the supply curve to a larger quantity supplied.

D) there is a movement down along the supply curve to a smaller quantity supplied.

If the price of chocolate falls, then

A) the supply curve of chocolate shifts rightward.

B) the supply curve of chocolate shifts leftward.

C) there is a movement downward along the supply curve of chocolate.

D) there is a movement upward along the supply curve of chocolate.

In the market for oranges, the demand and supply of oranges decrease by the same amount. The equilibrium quantity will ________ and the equilibrium price will ________.

A) decrease; not change

B) decrease; fall

C) remain the same; either rise or fall

D) remain the same; rise

If demand increases and supply decreases, what is the effect on equilibrium price and equilibrium quantity?

A) The price falls and the quantity might increase, decrease, or remain the same.

B) The price rises and the quantity might increase, decrease or remain the same.

C) The quantity decreases and the price might rise, fall, or remain the same.

D) The quantity increases and the price might rise, fall, or remain the same.

If technological advances lower the cost of computer chips, in the market for computers the equilibrium price will ________ and the equilibrium quantity will ________.

A) fall; increase

B) fall; decrease

C) rise; increase

D) rise; decrease

If the quantity of textbooks supplied is 10,000 per year and the quantity of textbooks demanded is 12,000 per year, there is a ________ in the market and the price will ________.

A) shortage; rise

B) shortage; fall

C) surplus; rise

D) surplus; fall