AP Microeconomics Practice Quiz: Demand

Correct Answer: B

Content point 6 states that 'The law of demand suggests that a change in the own-price causes a change in quantity demanded in the opposite direction.' This describes an inverse relationship.

Correct Answer: C

Content point 6 specifies that a 'change in the own-price causes a change in quantity demanded... and a movement along a demand... curve.' The other options are determinants of demand that would cause the entire curve to shift, as mentioned in content point 9.

Correct Answer: B

Content point 7 explicitly states that the downward-sloping demand curve is 'explained by the income effect and substitution effect and/or by diminishing marginal utility.'

Correct Answer: C

Content point 8 clearly states that 'The market demand curve (schedule) is derived from the summation of individual demand curves (schedules).'

Correct Answer: C

Content point 9 explains that 'Changes in the determinants of consumer demand can cause the demand curve to shift.' Income is a determinant of demand. For a normal good, an increase in income leads to an increase in demand, which is represented by a rightward shift of the curve.

Correct Answer: B

Content points 4 and 5 state that economic agents respond to incentives, such as prices. A lower price is an incentive for consumers to purchase more of a product, which is the basis of the law of demand.

Correct Answer: B

Content point 5 identifies that individuals face constraints, providing 'income' as a specific example. Available savings and loan eligibility are forms of income constraints.

Correct Answer: D

The substitution effect, mentioned in content point 7 as a reason for the law of demand, describes how consumers will substitute a relatively more expensive good (apples) with a relatively cheaper alternative (oranges).

Correct Answer: B

Content point 7 explicitly states that 'The conceptual relationship between price and quantity stated by the law of demand leads to downward-sloping demand curves.'

Correct Answer: A

This question combines two concepts. The change in income is a determinant that shifts the demand curve (Content 9). The subsequent decrease in the product's own-price causes a change in quantity demanded, which is a movement along the new, shifted demand curve (Content 6).

Correct Answer: B

Content point 3 directly states, 'A well-defined system of property rights is necessary for the market system to function well.'

Correct Answer: C

Content point 7 lists the income effect as one of the explanations for the law of demand. The income effect describes the change in consumption resulting from a change in real income (purchasing power) caused by a price change.

Correct Answer: C

Content points 4 and 5 explain that economic agents respond to incentives, and prices are a key example. A sale effectively lowers the price, creating an incentive for buyers to purchase more.

Correct Answer: B

Content point 6 refers to the demand curve as a 'marginal benefit' curve. The height of the demand curve at any given quantity represents the marginal benefit, or the maximum price a consumer is willing to pay for that specific unit.

Correct Answer: C

Based on content point 8, the market demand is the 'summation of individual demand.' Therefore, the market quantity demanded is the sum of the quantities demanded by all individuals at that price: 5 units + 8 units = 13 units.

Correct Answer: C

Content point 5 lists 'legal and regulatory frameworks' as a type of constraint that individuals face. A rationing law is a direct example of such a framework constraining consumer choice.