1. Demand is the relationship between quantity and price, all other factors affecting consumption of the product held constant - True or False?

2. Quantity demanded is the amount purchased at a given price. - True or False?

3. Demand can be represented in P-Q space by a line connecting all the P,Q pairs, where consumers will purchase quantity Q₁ at price P_1, Q₂ at P₂, etc. - True or False?

4. When the price of a normal good increases, demand decreases. - True or False?

5. If both income and price increase, the direction of the change in quantity demanded cannot be determined without more information.- True or False?

12. Explain how each of the following would affect the demand curve for Universal's rental cars. The only choices for your answers are: shift up, shift down, no effect.

1. Consumer incomes increase
2. Competitor's price decreases
3. Season switches from high to low season
4. Universal's rental price increases

13)

If demand for rental cars in Orlando were constant throughout the year, how could the quantities listed in the column "Market Demand" (in the Market Demand tab of the simulation) increase every month? Choose the best answer.

People moved to Orlando during the year

Resorts reopened after pandemic closures

The economy rebounded from the pandemic resulting in more business conferences

The price Universal charged to rent a car decreased each month.

14) What effect does each of the following have on the price elasticity (absolute value) of your product? Each answer must be one of the following: increase, decrease, no effect, unknown.

1. Increase in the price of your product

2. Increase in price of a competitor's product

3. Increase in the price of a complement

15) In the U.S. the price elasticity of gasoline is quite low (about -0.25), whereas the elasticity for a single gas station is very high. Why is that? Choose the best answer.

Some gas stations sell food.

Gas station owners collude to maintain high prices.

There are few substitutes for gasoline as a fuel for cars; however, there are many substitutes for any single gas station.

Electric cars don't use gasoline.

16) Why does increasing the price of your product increase the price elasticity of that product (assume all other factors that might affect that elasticity held constant)? Choose the best answer.

The law of demand says that consumers purchase less of a product as its price increases.

At the higher price more alternative products become price competitive--i.e., become substitutes.

Consumers expect you to increase your quality to match the higher price.

Because elasticity is negative.