Question 7: Consider the supply curve for sedans in an imaginary market. Because sedans and gasoline are _, an increase in the price of a gallon of gas shifts the demand curve for sedans to the _. Suppose that the price of a gallon of gas rises from $5 to $6. If an increase in average income causes a rightward shift of the demand curve, then you may conclude that sedans are a _ good. Suppose the price of a sedan decreased from $30,000 to $25,000. Price of a gallon of gas is $5 per gallon The current market price of Sedans is $30,000Īverage Household income is $60,000 per year For simplicity, assume that all sedans are identical and sell for the same price. Question 6: Consider the demand curve for Sedans in the United States. The following table shows their annual demand schedules: Question 5: Suppose that Carlos and Deborah are the only consumers of scented candles in a particular market. Change in price of the good leads to movement along the demand curve, not shift. True of False: The demand curve for apples must have shifted rightward between last month and today.Īnswer 4: False. Question 4: The price of 1 kg apples, which was $5 last month, is $6 today. It should be “quantity demanded” instead of “demand”. Question 3: True or False: As the price of apples rises, the demand for apples falls, ceteris paribus.Īnswer 3: False.

Question 2: _ refers to the willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period whereas _ refers to a specific number of units buyers want to buy at a specific price. There is nothing wrong with the statement.Īnswer 1: Demand refers to the willingness and ability of buyers, not just willingness.Demand refers to the willingness and ability of buyers, not just willingness.Instead of “willingness”, it should be “ability”.Instead of “demand”, it should be “quantity demanded”.Question 1: What is wrong with the statement: Demand refers to the willingness of buyers to purchase different quantities of a good at different prices during a specific time period:

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