AP Macroeconomics Quiz: Demand

What this quiz covers

This quiz focuses on Demand, giving you a quick way to practice the rules, question types, and explanations that matter most for AP Macroeconomics.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. An increase in the price of lumber used to build new homes.
2. A decrease in the price of new homes.
3. A decrease in mortgage interest rates for home buyers. (correct answer)
4. A new construction technology that makes building homes cheaper.

Explanation: A decrease in mortgage interest rates lowers the total cost of buying a home for consumers, making home ownership more affordable. This increases the demand for new homes at every price level, shifting the demand curve to the right. A price decrease causes a movement along the curve, while the other options affect the supply curve.

Question 2

1. A rightward shift in the demand curve for healthcare services. (correct answer)
2. A movement down along the demand curve for healthcare services.
3. A leftward shift in the demand curve for university education.
4. A rightward shift in the supply curve for retirement homes.

Explanation: A change in the demographic composition of the population represents a change in the number of buyers for certain goods and services. An older population increases the number of consumers demanding healthcare services, shifting the demand curve to the right. While demand for university education might shift left (C), A is the more direct and certain outcome. D describes a supply-side response.

Question 3

1. A recession that reduces the wealth and income of collectors. (correct answer)
2. A popular superhero movie franchise based on vintage comic book characters is released.
3. The price of vintage comic books increases by 20% due to a decrease in supply.
4. The price of modern comic books, a substitute, increases significantly.

Explanation: A recession reduces collector income, and since vintage comic books are a normal (and likely luxury) good, a decrease in income will lead to a decrease in demand, shifting the curve left. A popular movie would increase demand. A price increase for the good itself decreases quantity demanded, not demand. An increase in the price of a substitute would increase demand for vintage comics.

Question 4

1. decrease, because consumers will wait for the tax to take effect.
2. increase, because consumers will want to purchase before the price effectively rises. (correct answer)
3. remain unchanged, as the tax has not yet been implemented.
4. become indeterminate, as supply will also be affected by the announcement.

Explanation: The announcement of a future tax is an expectation of a future price increase. Consumers will react by increasing their current demand to avoid paying the higher price later. This shifts the current demand curve for automobiles to the right.

Question 5

1. Demand increases because the lower price shifts the curve to the right
2. Quantity demanded increases because price falls from A to B on the same curve (correct answer)
3. Demand decreases because the lower price shifts the curve to the left
4. Quantity demanded decreases because price falls from A to B on the same curve
5. Demand increases because consumer confidence rises, moving from A to B

Explanation: Demand is the entire curve showing the price-quantity relationship, while quantity demanded is the specific amount at one price. The graph shows movement from point A (higher price) to point B (lower price) along the same demand curve. According to the law of demand, when price falls, quantity demanded increases—we move down and right along the existing curve. This represents a movement along the demand curve, not a shift, because only price changed. A key misconception is thinking lower prices shift demand right; price changes never shift curves, they only cause movements along them. Strategy: If the curve stays in place and we move between points on it, price is the only thing that changed.

Question 6

1. The demand curve for bus travel will shift to the right. (correct answer)
2. The demand curve for bus travel will shift to the left.
3. The quantity demanded of bus travel will increase, but the demand curve will not shift.
4. The quantity demanded of bus travel will decrease, which is a movement along the curve.

Explanation: An inferior good is one for which demand increases as consumer income decreases. As consumers have less income, they substitute away from more expensive options (like cars or planes) towards cheaper alternatives like bus travel, thus shifting the demand curve for bus travel to the right.

Question 7

1. Demand increases because the higher price causes the curve to shift right
2. Quantity demanded decreases, moving from point A to point B on the same curve (correct answer)
3. Demand decreases because the higher price causes the curve to shift left
4. Quantity demanded increases, moving from point A to point B on the same curve
5. Demand shifts right because consumers expect even higher future prices

Explanation: Demand is the entire price-quantity relationship shown by the curve, while quantity demanded is the specific amount consumers will buy at a particular price. The graph shows movement from point A to point B along the same demand curve as price rises from P₁ to P₂. When price increases, the law of demand tells us quantity demanded decreases—we move up and left along the existing curve. This is a movement along the demand curve, not a shift of the curve itself. A key misconception is thinking that price changes shift the demand curve; they don't—price changes cause movements along the existing curve. Strategy: Ask yourself what changed—if only price changed, it's a movement along; if a non-price factor changed, the curve shifts.

Question 8

1. In the short run, demand increases; in the long run, quantity demanded increases
2. In the short run, quantity demanded increases; in the long run, demand increases (correct answer)
3. In the short run, demand decreases; in the long run, quantity demanded decreases
4. In the short run, quantity demanded decreases; in the long run, demand decreases
5. In the short run, demand increases; in the long run, demand is unchanged

Explanation: Demand is the entire curve showing all price-quantity combinations, while quantity demanded is the amount at one specific price. The scenario describes two distinct changes: first, a price decrease causes movement from A to B along D₁ (quantity demanded increases in the short run). Second, higher consumer confidence shifts the entire curve from D₁ to D₂ (demand increases in the long run). This perfectly illustrates the difference—price changes cause movements along curves (affecting quantity demanded), while determinant changes shift curves (affecting demand itself). A key misconception is using these terms interchangeably when they represent fundamentally different concepts. Strategy: Movement along = quantity demanded changes due to price; shift of curve = demand changes due to determinants.

Question 9

1. A rightward shift of the demand curve. (correct answer)
2. A leftward shift of the demand curve.
3. A movement upward and to the left along the demand curve.
4. A movement downward and to the right along the demand curve.

Explanation: For a normal good, demand has a direct relationship with consumer income. An increase in income means consumers are willing and able to buy more of the good at every price level, which is represented by a rightward shift of the entire demand curve.

Question 10

1. The demand curve will shift to the right.
2. The demand curve will shift to the left.
3. The demand curve will not shift, but price will rise.
4. The direction of the shift in the demand curve is indeterminate. (correct answer)

Explanation: The rise in the price of electricity, a substitute, will increase the demand for solar panels (a rightward shift). The negative durability study will decrease demand due to a change in tastes/preferences (a leftward shift). Since these two effects work in opposite directions, the net effect on demand is indeterminate without knowing the magnitude of each shift.

Question 11

1. An increase in demand for single-use bottles.
2. A decrease in demand for single-use bottles. (correct answer)
3. An increase in the quantity demanded of single-use bottles.
4. A decrease in the supply of single-use bottles.

Explanation: This trend represents a change in consumer tastes and preferences away from single-use plastic. This change will decrease the demand for single-use plastic water bottles at every price, causing the demand curve to shift to the left.

Question 12

1. A rightward shift in the demand curve for beef.
2. A leftward shift in the demand curve for beef. (correct answer)
3. A movement down along the demand curve for beef.
4. A movement up along the demand curve for beef.

Explanation: Since beef and chicken are substitutes, consumers can choose between them. When the price of chicken falls, consumers will buy more chicken and less beef at any given price of beef. This decrease in demand for beef is represented by a leftward shift of its demand curve.

Question 13

1. the law of diminishing marginal returns in production.
2. the increasing opportunity cost of producing more units.
3. the income and substitution effects of a price change. (correct answer)
4. the direct relationship between price and producer surplus.

Explanation: The downward slope of the demand curve is explained by the substitution effect (consumers switch to cheaper alternatives when price rises) and the income effect (a price increase reduces consumers' real purchasing power, leading them to buy less). The other options relate to production and supply concepts.

Question 14

1. product A is an inferior good.
2. product B is a normal good.
3. products A and B are substitutes.
4. products A and B are complements. (correct answer)

Explanation: Complementary goods are used together. When the price of product A increases, consumers buy less of A. Because A and B are used together, the demand for product B also falls. This defines the relationship between complements.

Question 15

1. A news report on the health benefits of eating avocados.
2. An increase in the price of tortilla chips, a complement.
3. A decrease in the price of avocados due to a large harvest. (correct answer)
4. A rise in consumer incomes, assuming avocados are a normal good.

Explanation: A change in the price of the good itself causes a movement along the demand curve (a change in quantity demanded), not a shift of the entire curve. The other options are changes in the determinants of demand (tastes, price of related goods, income) and would therefore cause the demand curve to shift.

Question 16

1. a substitute good.
2. a complementary good.
3. a normal good.
4. an inferior good. (correct answer)

Explanation: By definition, an inferior good is a good for which demand increases when consumer income falls. This is because consumers substitute away from more expensive goods towards cheaper alternatives as their purchasing power decreases.

Question 17

1. The demand for the product has increased.
2. The demand for the product has decreased.
3. The quantity demanded of the product has increased. (correct answer)
4. The quantity demanded of the product has decreased.

Explanation: According to the law of demand, a decrease in the price of a product leads to an increase in the quantity demanded. This is a movement along the demand curve, not a shift in the curve itself. Therefore, 'demand' has not increased, but the 'quantity demanded' has.

Question 18

1. Quantity demanded decreases from $Q_1$ to $Q_2$ at price $P^*$
2. Quantity demanded increases from $Q_1$ to $Q_2$ at price $P^*$ (correct answer)
3. Quantity demanded is unchanged because only price can change quantity demanded
4. Demand decreases because the price level rose from $P_1$ to $P_2$
5. Demand increases because quantity demanded rose from $Q_1$ to $Q_2$

Explanation: Demand refers to the entire curve relationship, while quantity demanded is the specific amount consumers buy at one price. The graph shows a rightward shift from D₁ to D₂ with price held constant at P*. At any given price, a rightward shift means consumers now want to buy more—so at price P*, quantity demanded increases from Q₁ to Q₂. This illustrates how demand shifts change quantity demanded even when price doesn't change. A misconception is thinking quantity demanded can only change if price changes—but shifts in demand change quantity demanded at every price, including the current one. Strategy: When demand shifts right, quantity demanded increases at every price; when demand shifts left, quantity demanded decreases at every price.

Question 19

1. A decrease in consumer confidence that reduced planned spending at each price level
2. A decrease in the overall price level that increased quantity demanded along $D_1$
3. An increase in consumer confidence that raised planned spending at each price level (correct answer)
4. An increase in the overall price level that decreased quantity demanded along $D_1$
5. A fall in the price of a complement that shifted demand left for real output

Explanation: Demand refers to the entire relationship between price and quantity at all price levels, while quantity demanded is a specific amount at one price. The graph shows a rightward shift from D₁ to D₂, meaning consumers are willing to buy more at every price level. This shift indicates an increase in demand, which occurs when a non-price determinant changes favorably. Consumer confidence is a key macroeconomic determinant—when confidence rises, people feel more optimistic about their economic future and increase planned spending at each price level. A common misconception is confusing movements along a curve (caused by price changes) with shifts of the curve (caused by determinant changes). Strategy: If the entire curve moves, look for what changed besides price—here it's consumer confidence affecting spending behavior.

Question 20

1. The income of coffee drinkers.
2. The price of tea, a substitute for coffee.
3. The price of coffee itself. (correct answer)
4. The number of coffee drinkers in the market.

Explanation: A change in the price of the good itself causes a change in the quantity demanded, which is represented by a movement along the existing demand curve. Changes in income, prices of related goods, or the number of buyers all cause the entire demand curve to shift.