Define the law of demand and explain how this relates to typical human behavior.
What will be an ideal response?
The law of demand says that the quantity of a good demanded in a given time period increases as its price falls, ceteris paribus. Typically people respond to price when buying a good. People are usually willing to buy more of a good at a lower price.
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What can we predict about the effect on consumption of an increase in government spending?
A. Consumption will increase by the amount of the government spending. B. Consumption will increase by an amount equal to the MPC times the change in real GDP. C. Consumption will not rise as government spending rises. D. Consumption will increase by an amount equal to the MPC times the change in government spending.
The accompanying figure shows the demand curve for a product that can be sold only in whole-number amounts.
What is the maximum price that any buyer would be willing to pay for the first unit?
A. 15 B. 25 C. 35 D. 40
Which factor will increase the demand for a product?
a. An increase in the price of a substitute product b. An increase in the price of a complementary product c. An unfavorable report on the value of the product d. A decrease in the number of buyers
In 1991, the European Union began the process of forming the
A. only continental military force in the world. B. first international trade agreement in the world. C. first unified currency in the world. D. largest free-trade zone in the world.