Demand

Cindy runs Cindy's Cupcake Shop. She has decided to charge $3 for a gourmet cupcake. She knows the individual demand schedules (shown below) for five of her customers. What is the market demand that Cindy will face for her five customers, if she charges $3 a cupcake?

21 cupcakes

Which of the following would be considered nonprice determinants of the demand for flour?

A change in the number of buyers of flour A change in consumer preferences to bake A change in buyers' expectation of the price of flour next week

Which is the broadest definition of a market?

A group of buyers and sellers who exchange a good, service, or resource, not necessarily at a specific place.

Which of the following can both increase and decrease demand depending on the type of good?

An increase in consumer income

The number of consumers willing and able to purchase new cars increases. How will the market for new cars change?

An increase in demand for new cars

Consider a consumer who buys cookies and ice cream for snacks. Assume that the price of ice cream increases. Which of the following is an example of the substitution effect?

As the price of ice cream increases, ice cream becomes relatively more expensive than cookies, so the consumer will buy more cookies and less ice cream.

Jack likes tacos. He values the first taco he eats at $5.00, the second taco at $4.00, the third taco at $3.00, and the fourth taco at $2.00. If the price of tacos is $3.25, Jack will buy tacos.

Blank 1: 2 or two

One assumption of the demand curve is that the number of is constant.

Blank 1: buyers, consumers, or customers

Assume you buy three goods: hamburgers, French fries, and pizza. Hamburgers and French fries are most likely , whereas hamburgers and pizza are most likely .

Blank 1: complements, complementary, or complement Blank 2: substitutes, substitution, or substitute

A decrease in the price of good A will cause an increase in the demand for good B when the two goods are

Blank 1: complements, complementary, or compliments

The (one word in each blank) represents the relationship between the price of a good, service, or resource and the quantity that individuals and firms are willing and able to buy, all else held constant, in a tabular form.

Blank 1: demand Blank 2: schedule

When a demand curve shifts either to the right or to the left, we say there has been a change in

Blank 1: demand or the demand schedule

Consumer expectations play a crucial role in determining the for a good or service.

Blank 1: demand, current demand, or present demand

A change in (one word), all else held constant, generates a change in quantity demanded.

Blank 1: price or prices

The income effect refers to the change in purchasing power when the (one word) changes.

Blank 1: price or prices

A decrease in the price of a good's will cause a decrease in the demand for the good.

Blank 1: substitute or substitutes

An increase in the price of a good's will shift the demand for the good to the right.

Blank 1: substitute or substitutes

Jack likes burritos. He values the first burrito at $10.00, the second burrito at $8.00, and the third burrito at $6.00. If the price of burritos is $6.50, Jack will buy burritos.

Blank 1: two or 2

Which of the following pairs of goods most likely represents substitutes?

Butter and margarine

Which of the following plays a crucial role in determining the demand for a good or service?

Consumer expectation

_______ (one word) curves assume that the number of buyers in the market is constant.

Demand

A new health study was released promoting the benefits of broccoli. As a result, consumer perception of broccoli improves. How will this event change the market for broccoli?

Demand for broccoli will increase at each price.

The price of hardcover books increases, a substitute in consumption to eBooks. What effect will the change in price have on the market for eBooks?

Demand for eBooks will increase at each price.

A recession has caused incomes in the United States to fall. How will this impact the market for generic shampoo, an inferior good?

Demand for generic shampoo will increase.

If consumer preference for cooking at home increases, how will this impact the market for groceries?

Demand will increase at each price.

Which of the following are reasons for the demand curve sloping downward?

Diminishing marginal utility The income effect The substitution effect

While in college, Jane purchases a significant amount of generic coffee, but after she receives her first paycheck, she no longer purchases the generic brand and instead buys a grocery store name brand. Once Jane has been working for 5 years and has earned several raises, she now purchases luxury coffee from a small, local roaster. What is true about the grocery store name brand coffee based on Jane's behavior?

It starts as a normal good, then becomes an inferior good.

Which of the following correctly states the three main reasons the demand curve is downward sloping?

Marginal benefit, purchasing power, and substitutes

are similar goods, services, or resources that can take the place of another good. (Enter one word in the blank.)

Substitutes

The effect is the effect that a change in the price of one good, service, or resource has on the demand for another.

Substitution

Which statement best describes the demand curve for most goods and services?

The demand curve is downward sloping.

How is a decrease in demand depicted graphically?

The demand curve shifts to the left.

The price of coffee, a substitute to tea, decreases. How will this affect the market for tea?

The demand curve will shift to the left.

For normal goods, an increase in income will have what effect on demand?

The demand curve will shift to the right.

The price of paint, a complement to paint brushes, decreases. Which of the following statements about demand is true?

The demand for paint brushes will increase.

The price of pencils, a substitute to pens, decreases. Which of the following statements about demand is true?

The demand for pens will decrease.

Which of the following statements is true?

The income effect causes a movement along the demand curve, while a change in income shifts the demand curve.

________ focuses entirely on the effect of a change in the good's price on the quantity of the product consumed and holds everything else constant.

The law of demand

Tastes and preferences refer to: The perceived desirability of consuming a good, service, or resource.

The perceived desirability of consuming a good, service, or resource.

Which of the following is a determinant of demand in the market for laptop computers?

The price of desktop computers, a substitute in consumption for laptops.

The demand for a product will change when the prices of the goods that are complements or substitutes for that product change.

True

What makes one good a substitute for another?

Who uses the product

A change in quantity demanded is caused by:

a change in a good's own price.

A shift in the entire demand curve is called:

a change in demand.

A change in price, all else held constant, generates:

a change in quantity demanded, but not a change in demand.

The change in the quantity of a good, service, or resource that consumers, firms, and governments are willing and able to buy due to a change in its price is called:

a change in the quantity demanded.

If incomes fall due to a recession, goods considered to be normal will experience:

a decrease in demand at each price.

When demand shifts to the left, it is called:

a decrease in demand.

An increase in the price of a good's complement will cause:

a decrease in the demand for the good.

Suppose that your income remains unchanged, but the price of gasoline decreases. You can afford to purchase more gasoline, because there has been:

a downward movement along your existing demand curve, which is partially explained by the income effect.

A decrease in demand is shown by:

a leftward shift of the demand curve.

A change in quantity demanded can be described as:

a movement along the demand curve that results from a change in the good's own price.

If demand shifts to the right when income increases, we can conclude that the good is:

a normal good.

A change in demand refers to:

a shift in the demand curve, either right or left.

A change in income is illustrated by:

a shift in the demand curve.

When economists refer to a "good," they are referring to:

a tangible product that consumers, firms, or governments wish to purchase.

The demand curve should slope downward because:

according to the law of demand, a lower price will lead to a higher quantity demanded.

In economics, the word "curve" is typically used to refer to:

almost any graphical representation of the relationship between two variables.

If butter and margarine are considered substitutes, then an increase in the price of butter will cause:

an increase in the demand for margarine.

If goods A and B are substitutes, then:

an increase in the price of good A will cause the demand for good B to shift to the right.

An increase in demand signals:

an increase in the quantity demanded at every price, so the curve shifts to the right.

An inferior good has:

an inverse relationship between demand for the good and income.

When economists refer to resources, they are referring to:

any item that is used to produce goods and services.

If the price of tortilla chips decreases, and as a result, you buy more salsa, then tortilla chips and salsa:

are complements.

Substitute goods:

are viewed as replacements for other goods.

The law of demand states that:

as the price of a good, service, or resource falls; the quantity demanded will rise, all else held constant.

In a market:

buyers and sellers interact to trade goods, services, or resources.

The demand curve:

can be a straight line or a nonlinear curve.

A change in income:

can increase or decrease demand.

A change in consumer expectations on the price of a good will:

change demand for the good at each price.

A movement along a demand curve is called a(n) __________ , and a shift in a demand curve is called a(n) __________.

change in quantity demanded; change in demand

When hot weather sets in, we would expect that the demand for:

cold drinks increases.

In a market,:

competition among suppliers tends to drive prices down, and competition among buyers tends to drive prices up.

An increase in the price of a good's will shift the demand curve of the good to the left.

complement

Goods, services, or resources that are consumed together are called

complements

When the price of spaghetti sauce increased, the demand for spaghetti noodles shifted to the left. By this description, these two must be:

complements

If a good is inferior, then:

consumer income and demand are inversely related.

More of a good will be demanded at each price if:

consumers' perceptions of the good improve.

Consumer expectations play a:

crucial role in determining the demand for a good or service.

If consumers expect prices to fall,:

current demand will fall.

When you plot the data from the demand schedule on a graph, the result is called the demand

curve, line, or function

According to the law of , price and quantity demanded are inversely related.

demand

Market is based on the overall preferences of consumers in the market.

demand

Tastes and preferences, the number of buyers, and buyer expectations are all nonprice determinants of

demand

The for a product will change when the prices of the goods that are complements or substitutes for that product change.

demand

The law of focuses entirely on the effect of a change in the good's price on the quantity of the good consumed and holds everything else constant.

demand

The size of the shift in the (one word) curve depends on which nonprice determinant (tastes and preferences, income, etc.) changes and how much it changes.

demand

When income changes, (one word) can either increase or decrease.

demand

Without individuals and households that are willing and able to buy a good, the side of the market cannot exist.

demand

When the price of a related good, such as a substitute or a complement, changes:

demand can increase or decrease.

A graphical representation of the relationship between the price of a good, service, or resource and the quantity that individuals and firms are willing and able to buy, all else held constant, describes the:

demand curve.

The relationship between the price of a good, service, or resource and the quantity that individuals and firms are willing and able to buy, all else held constant, is graphically represented by a:

demand curve.

The ________ and the ________ are two ways to show the overall relationship between the price of a good and the quantity demanded for the good.

demand curve; demand schedule

Suppose there is a reputable, scientific study that finds substantial health benefits associated with the consumption of pizza. In this case, we expect:

demand for pizza to increase.

An increase in the price of a good's substitute will shift the:

demand for the good to the right.

If an event affects demand such that less of a good, service, or resource is demanded at all prices, we say that:

demand has decreased.

When more of a good, service, or resource is consumed at all prices, we say that:

demand increased.

A normal good, as opposed to an inferior good, is a good for which:

demand increases as income increases.

When a nonprice determinant of demand changes, a change in:

demand occurs, which has the effect of shifting the entire demand curve to the right or left.

A tabular representation of the relationship between the price of a good, service, or resource and the quantity that individuals and firms are willing and able to buy, all else held constant, describes the:

demand schedule.

When income changes,:

demand will shift right or left.

As the benefit of consuming more of a good falls with each additional unit, the price consumers are willing and able to pay also falls with increased consumption. This scenario describes:

diminishing marginal utility.

The negative relationship between the quantity of a good, service, or resource and the marginal utility obtained from each additional unit consumed in a given period of time describes:

diminishing marginal utility.

Competition among suppliers tends to drive prices _______; competition among buyers tends to drive prices ______ .

down; up

Due to the inverse relationship between the price of a good and the quantity demanded for the good, we expect that the demand curve is:

downward-sloping.

A shift of the demand curve is:

due to a change in demand.

Demand, demand curve, and demand schedule are three different ways of:

expressing information about the demand for a good, service, or resource.

Because of diminishing marginal utility, the benefit of consuming more of a good:

falls with each additional unit, so the price consumers are willing and able to pay falls with increased consumption.

Markets, such as the New York Stock Exchange and your local retail store, are ______ markets.

formal

One of the determinants of demand is the anticipation of (future/current) prices by consumers. (Choose an option from the ones given within parenthesis.)

future

Assuming a downward-sloping demand curve and a change in price, all else held constant:

generates a change in quantity demanded.

As a winter storm approaches, we would expect that the demand for:

generators increases.

The horizontal summation of individual demand curves:

gives the market demand curve.

A(n) is a tangible product that consumers, firms, or governments wish to purchase.

good

When graphing a demand curve, we always place quantity demanded on the (horizontal/vertical) axis.

horizontal

When graphing a demand curve, we always place quantity demanded on the (horizontal/vertical) axis

horizontal, x, or X

The demand schedule displays the demand for a product:

in a table, showing the different prices and the corresponding quantities demanded.

Suppose you have $18.00 to spend on coffee each week. When the price of coffee increases from $2.00 to $3.00, the purchasing power falls from 9 coffees per week to 6 coffees per week. This decrease in the quantity of coffee demanded illustrates the effect.

income

Suppose you have $30 to spend on tacos each week. When the price of tacos increases from $2.00 to $3.00, the purchasing power falls from 15 tacos per week to 10 tacos per week. This decrease in the quantity of tacos demanded illustrates the effect.

income

Consumers' willingness and ability to buy a good, service, or resource will change if:

income changes, which will result in a new demand relationship.

Normally when you buy a sandwich, you also buy a cookie for $2. Today when you buy your sandwich, the cookies are $1, and you buy two. This scenario illustrates the:

income effect.

You are out on a Friday evening and decide to stop for an ice-cream cone. Usually you buy a single-scoop cone for $2. Tonight the shop is offering two single-scoop cones for $3, so you buy one for you and one for your friend. This scenario illustrates the:

income effect.

A good for which there is an inverse relationship between the demand for the good and income is a(n) (one word) good.

inferior

For (one word) goods, an increase in income decreases demand, and a decrease in income increases demand.

inferior

Markets such as swap meets or garage sales are called _____ markets.

informal

You go to a baseball game on "dollar dog" night. In the first inning, you gobble up three hot dogs loaded with toppings. In the fourth inning, you have one more hot dog, but it takes a bit longer to finish. In the eighth inning, you buy one more hot dog but eat only half. This scenario is an illustration of the:

law of diminishing marginal utility.

You have just returned from seeing a movie with a friend and are relaxing at home. Another friend calls and asks whether you will watch the same movie with her. Though you enjoyed the movie, you are not interested in watching it again. This scenario is an example of the:

law of diminishing marginal utility.

A change in demand:

leads to a shift of the demand curve.

When less of a good, service, or resource is demanded at all prices, we expect the demand curve to shift to the

left

A(n) (one word) refers to a group of buyers and sellers who exchange one specific good, service, or resource, not necessarily at a specific place.

market

Any place where, or mechanism by which, buyers and sellers interact to trade goods, services, or resources is a called a(n):

market

The (one word) demand represents the horizontal summation of individual demand curves.

market

Any place where, or any mechanism by which, buyers and sellers interact to trade goods, services, or resources is a(n)

market or marketplace

Prices and quantities traded are determined by the interaction of buyers and sellers in a(n)

market or marketplace

A small hatchback car, that is a normal good in a low-income country,:

may be an inferior good in high-income countries.

Demand will increase if there are:

more buyers.

When there is an increase in demand,:

more is demanded at every price.

If consumers' perceptions of a good improve,:

more of the good will be demanded at each price.

A change in the quantity demanded refers to a:

movement along the demand curve as the price changes.

Diminishing marginal utility describes the:

negative relationship between the quantity of a good, service, or resource and the marginal utility obtained from each additional unit consumed in a given period of time.

Tastes and preferences, the number of buyers, and buyer expectations are:

nonprice determinants of demand.

A good for which there is a direct relationship between the demand for the good and income is a(n) good.

normal

A good for which there is a direct relationship between the demand for the good and income is a(n) good. (Enter one word in the blank.)

normal

If income increases, the demand for a(n) good increases.

normal

Market demand is based on the:

overall preferences of everyone in the market.

Out of rationing mechanisms, such as prices, lotteries, first-come first-served arrangements, and contests, tend to be the most efficient mechanism for allocating goods, services, and resources among competing users.

price

When a non (one word) determinant of demand changes, the demand curve shifts.

price

When we draw a demand curve for hamburgers, we focus only on the (one word) of hamburgers and the quantity of hamburgers demanded at each price.

price

The income effect is the effect that a change in the:

price of a good, service, or resource has on the purchasing power of income.

The substitution effect is the effect that a change in the:

price of one good, service, or resource has on the demand for another.

A demand curve is graphed by plotting:

price on the vertical axis and quantity demanded on the horizontal axis.

When we draw a demand curve for hamburgers, we focus only on the ________ for hamburgers and the _________ at each price.

price; quantity demanded

One mechanism for allocating goods, services, and resources among competing users is reliance on:

prices

Which of the following tends to be an efficient mechanism for allocating goods, services, and resources among competing users by providing important feedback to producers and consumers?

prices

In most markets, are determined by the interactions of numerous buyers and sellers.

prices, quantities, price, or quantity

When the price of a good or service decreases:

quantity demanded increases.

There is an inverse relationship between price and demanded.

quantity, amount, or product

The income effect:

refers to the change in the demand for a good caused by a change in a consumer's purchasing power. works in the same direction as the substitution effect for normal goods.

A(n) is any item, whether a gift of nature, the result of production, or the result of human effort, that is used to produce goods and services.

resource

A(n) is an intangible product or action that consumers, firms, or governments wish to purchase.

service

An intangible product or action that consumers, firms, or governments wish to purchase is a:

service

An intangible product that consumers wish to purchase is a:

service

According to the law of demand, lower prices lead to a higher quantity demanded. As a result, the demand curve:

should slope down.

As winter approaches, we would expect that the demand for:

skis increases.

The demand curve shifts when:

something other than the price of a good changes.

The terms "normal" and "inferior" are:

subjective to the incomes of people.

If an increase in the price of good A results in an increase in the demand for good B, then goods A and B are:

substitutes

Two goods are , if an increase in the price of one good increases the demand for the other.

substitutes

When the price of lemonade increases, Jack buys more iced tea and less lemonade. The decrease in the quantity demanded for lemonade and the increase in the quantity demanded for iced tea is an example of the effect.

substitution

When the price of oranges increases, Jack buys more apples and fewer oranges. The decrease in the quantity demanded for oranges and the increase in the quantity demanded for apples is an example of the effect.

substitution

The perceived desirability of consuming a good, service, or resource is the:

tastes and preferences of buyers.

The demand curve for a normal good is downward sloping because

the benefit of consuming more of a good falls with each additional unit, so the price consumers are willing and able to pay also falls with increased consumption. as prices rise, the purchasing power of each dollar earned falls, and consumers are willing and able to buy less of a good. when consumers purchase substitutes, the quantity demanded of the good falls.

When there is an increase in demand,:

the demand curve shifts to the right.

If there is a change in a nonprice determinant of demand for a good,:

the demand curve shifts.

When income decreases,:

the demand for an inferior good increases.

Suppose that you only eat hot dogs on a hot dog bun and you never eat hot dog buns without a hot dog. If the price of hot dog buns increases:

the demand for hot dogs decreases.

When a nonprice determinant of demand changes,:

the entire demand curves shifts.

The market demand represents:

the horizontal summation of individual demand curves.

In a "market,"prices and quantities traded are determined mostly by:

the interaction of buyers and sellers in a market.

The overall or total demand for a good, service, or resource is:

the market demand.

Demand for a good, service, or resource will increase when:

the number of buyers increases.

Whether a good is normal or inferior depends on:

the preferences of all consumers in the aggregate.

As the price of a good, service, or resource rises:

the quantity demanded will fall.

When we talk about the demand for a product, we are referring to:

the quantity that consumers are willing and able to buy at a variety of different prices, all else held constant.

How much a nonprice determinant changes (and which one changes) will ultimately determine:

the size of the shift in the demand curve.

When markets and prices are used to allocate, or ration, goods, services, and resources; the allocation is determined primarily by:

the willingness and the ability to pay the market price.

When graphing a demand curve, we place price on the _______ and quantity demanded on the _______.

vertical axis; horizontal axis

The income effect, the substitution effect, and diminishing marginal utility together explain:

why demand curves are downward-sloping.

The income effect, the substitution effect, and diminishing marginal utility explain:

why the quantity demanded will fall when prices rise.

A demand curve and demand schedule express information about the:

willingness and ability to purchase a good.

A market cannot exist:

without individuals and firms that are willing and able to buy a good.