Quiz Time: Can You Name All the Determinants of Demand?

📚 Quick Study Guide

• 💰 Price of the Good/Service: 📉 As price increases, quantity demanded typically decreases (Law of Demand).
• 📈 Consumer Income: For normal goods, demand increases as income increases. For inferior goods, demand decreases as income increases.
• 👯 Prices of Related Goods:
  • ↔️ Substitutes: If the price of a substitute increases, demand for the original good increases.
  • Complementary Goods: If the price of a complement increases, demand for the original good decreases.
• 🎯 Consumer Tastes and Preferences: Changes in tastes and preferences directly impact demand.
• 📢 Consumer Expectations: Expectations about future prices or income can affect current demand.
• 👥 Number of Buyers: An increase in the number of buyers leads to an increase in overall demand.
• 📅 Seasonality: Certain goods and services experience predictable fluctuations in demand based on the time of year (e.g., winter coats, holiday decorations).

Practice Quiz

1. What is the most fundamental determinant of demand?
   1. Consumer tastes
   2. Income
   3. Price
   4. Expectations
2. If the price of coffee increases, what is likely to happen to the demand for tea (assuming they are substitutes)?
   1. Demand for tea will decrease
   2. Demand for tea will increase
   3. Demand for tea will remain the same
   4. There is no relationship
3. Which of the following is an example of an inferior good?
   1. Organic vegetables
   2. Designer clothing
   3. Generic brand cereal
   4. Luxury cars
4. If consumers expect the price of gasoline to increase next week, what is likely to happen to the demand for gasoline this week?
   1. Demand will decrease
   2. Demand will increase
   3. Demand will remain the same
   4. There is no change
5. An increase in the number of people moving into a city will likely cause:
   1. A decrease in demand for housing
   2. An increase in demand for housing
   3. No change in the demand for housing
   4. A decrease in the supply of housing
6. During the holiday season, what typically happens to the demand for holiday decorations?
   1. Demand decreases
   2. Demand increases
   3. Demand remains constant
   4. There is no predictable change
7. If the price of hot dogs increases, what is likely to happen to the demand for hot dog buns (assuming they are complements)?
   1. Demand for hot dog buns will increase
   2. Demand for hot dog buns will decrease
   3. Demand for hot dog buns will remain the same
   4. Demand for ketchup will increase