Supply and Demand: Notes and Examples

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1. As price falls,
Quantity demand rises
2. Goods for which demand is negatively related to income are called Inferior
3. In the market for tea, for some consumers
Coffee is a substitute
4. When the price of demand for a good is more than one, an increase in the price of the product causes total revenue to Decrease
5. Movement along the demand curve for high rise apartments will be cause by a change in Price of the high rise apartments
6. To determine the relationship between two goods, an economist would estimate Cross elasticity of demand
7. Which of the following is not a determinant of demand for diesel? The price of diesel
8. Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect The demand for honey to increase
9. Based on a survey, the income elasticity of demand for Sony MP3 Player is 0.85. This shows that Sony MP3 Plays Are normal goods
10. For any horizontal demand curve, the calculated price elasticity of demand is Infinity
11. Raiz bakery observe that when it raise the price of the pie, total revenue from the pie increase and vice versa. This indicates that The demand for the pie must be inelastic
12. Which of the following goods and services has the highest price elasticity of demand based on the proportion income spent on the goods and services ? New iPhone

13. Suppose that the price of product X rises by 15 percent and the quantity supplied of X increases by 20 percent. The coefficient of price elasticity of supply for good X is : More than 1 and therefore supply is elastic

14. As the price of egg increases, Sophie’s production of cakes will Decrease the supply of cakes
15. A shift to either the left or right of a supply curve is called A change in supply
16. The law of supply indicates that :
Increase the quantity supplied of a good when its price rises 17. All of the following are held to be...
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