1. Arrow up or down: According to the law of demand, an increase in price ____ the quantity demanded.
2. From the following list, choose the variables that are held fixed in drawing a market demand curve:
The price of the product
Consumer income
The price of other related goods
Consumer expectations about future prices
The quantity of the product purchased
3. From the following list, choose the variables that change as we draw a market demand curve:
The price of the product
Consumer income
The price of other related goods
Consumer expectations about future prices
The quantity of the product purchased
4. The market demand curve is the ____ (horizontal/vertical) sum of the individual demand curves.
5. A change in price causes movement along a demand curve and a change in ____.
6. Draw a Demand Curve. Your state has decided to offer its citizens vanity license plates for their cars and wants to predict how many vanity plates it will sell at different prices. The price of the state s regular license plates is $20 per year, and the state s per-capita income is $30,000. A recent survey of other states with approximately the same population (3 million people) generated the following data on incomes, prices, and vanity plates:

a. Use the available data to identify some points on the demand curve for vanity plates and connect the points to draw a demand curve. Don t forget ceteris paribus.
b. Suppose the demand curve is linear. If your state set a price of $50, how many vanity plates would bepurchased?

Transcribed Image Text:

State Price of vanity plate$ 60 S 55 50 40 20 rice of reqular plates 20 20 35 Income 30,000 25,000 30,000 30,000 Quantity of vanity plates 6,0006,00016,000 16,000