Extra 1-4

Question 1

Law of demand

Answer 1

The quantity demanded of a good falls when he price of the good rises.

Question 2

Normal good?

Answer 2

A good for which an increase in income leads to an increase in demand.

Question 3

Inferior good?

Answer 3

An increase in income leads to a decrease in demand.

Question 4

Substitutes?

Answer 4

Increase in the price of one leads to an increase in the demand for the other.

Question 5

Complements?

Answer 5

Increase in the prices of one leads to decrease in the demand for the other.

Question 6

Reasons for shift in the demand curve?

Answer 6

Income
Price of related goods 
Taste 
Expectations 
Number of buyers

Question 7

What is quantity supplied?

Answer 7

The amount of a good that sellers are willing and able to sell.

Question 8

What is law of supply?

Answer 8

The quantity supplied of a good rises when the price rises.

Question 9

Determinants of Supply curve?

Answer 9

Input prices
Technology- raises supply
Number of sellers- less sellers supply goes down

Question 10

What is quantity demanded?

Answer 10

The amount of a good that buyers are willing and able to purchase