ECON 2010 Ch. 3

True or false: When the price of one product rises, the demand for its substitute will increase.

true

Which of the following is a determinant of demand?

Income

Which of the following statements are true?

A decrease in consumers' income would decrease the demand for a normal good. An increase in the price of a normal good would decrease the quantity demanded of the good.

Which of the following would most likely lead to a decrease in demand?

A decrease in the number of buyers

Which exemplifies a pair of complementary goods?

A hot dog and relish

Which statement about demand and supply is true?

An increase in consumer income is likely to increase the demand for a normal good.

Which of the following exemplifies a change in buyers' tastes?

An increase in demand for digital cameras over 35mm cameras.

Which of the following is likely to cause an increase in the demand for a good or service?

An increase in the number of buyers

Which of the following would likely increase the demand for a normal good? (Check all that apply.)

An increase in the number of buyers A decrease in the price of complementary goods

Which exemplifies a pair of substitute goods?

Hot dogs and hamburgers

Which of the following affects the demand for normal goods and inferior goods?

Income

Which of the following would increase the demand for goods and services in the United States?

Large-scale immigration

Which of the following are determinants of demand?

Number of buyers Prices of related goods Consumer tastes Consumer expectations Consumer income

Which of the following exemplify a decrease in the demand for goods due to a decrease in the number of buyers?

People leaving the small towns where they grew up to look for job opportunities People retiring and leaving the cities where they worked

Which of the following are substitutes?

Pepsi and Coca-Cola

Which of the following are determinants of supply?

Producer expectations Taxes and subsidies Prices of other goods

Which of the following are the characteristics of a competitive market?

Standardized products A large number of buyers and sellers

Which of the following specifically refers to demand?

The buyer side of any market

Which are reasons for changes in buyer tastes?

The introduction of products The results of health studies The development of new technology

True or false: Resource costs or changes in these costs to production are responsible for shifts in the supply curve.

True

True or false: The law of demand can be supported by the income effect.

True

The inverse relationship between price and quantity demanded can be graphically illustrated by ______.

a downward sloping curve

The willingness and ability of a consumer to buy a normal product falls because of ______.

a fall in income

The law of demand is consistent with common sense because people ordinarily ______.

buy more at a low price

The price actually paid for a good is not reflected in the demand because demand is merely a statement of ______ buying of the good.

buyers' intentions regarding the

A ______ good is one that is used together with another good.

complementary

The concept of demand can be summarized by a schedule or curve showing the quantity of a product that would be ______.

consumed at various possible prices

An unfavorable change in consumer tastes and preferences for a product will ______ demand, which is illustrated as a shift of the demand curve to the ______.

decrease; left

A buyer's intentions or plans in regard to the purchase of a product is known as ______.

demand

The inverse, or negative, relationship between price and quantity demanded is known as the law of ______.

demand

All competitive markets involve which of the following?

demand supply quantity price

Consumers experience ______ marginal utility the more they consume of a particular good or service.

diminishing

Consumers will only buy additional units of a good if the price of the good is reduced is an example of ______.

diminishing marginal utility

During the second quarter, the price of Jonah's burgers remains constant, but the price of Sam's burgers increases. Other things BLANK, the law of demand indicates that fewer Sam's burgers will be purchased than in the previous quarter.

equal

The "other-things-equal" assumption is important in the law of demand because ______.

factors in addition to price affect the amount of a product purchased

If the birthrate increases, the purchase of baby products is likely to ______.

increase

A favorable change in consumer tastes and preferences for a product will BLANK demand, shifting the demand curve to the (right/left).

increase; right

"My income increased because of a substantial raise; therefore I decreased my consumption of Spam." This statement best exemplifies the relationship between income and a(n) ______ good.

inferior

Products that have decreased demand when consumer incomes rise and increased demand when consumer incomes fall are called ______ goods.

inferior

A demand curve shows the ______.

inverse relationship between price and quantity demanded for a product

The ______ is consistent with common sense because people ordinarily do buy more of a product at a lower price.

law of demand

Diminishing marginal utility states that less satisfaction is derived from each successive unit of a product consumed. Therefore, the law of demand is upheld because, as each successive unit yields ______, consumers will buy additional units only if the price of those units is progressively ______.

less and less utility; reduced

The income effect indicates that a ______ price increases the purchasing power of income, enabling consumers to purchase ______ of a product and vice versa.

lower; more

Equilibrium price is also knows as

market-clearing price

The relationship between the price of a good or service and the quantity demanded of that good or service described by the law of demand is

negative

Other things equal, when price falls, the quantity demanded rises. This represents the ______ relationship between the price and quantity demanded.

negative, or inverse,

Upon receiving a substantial raise, Jessie increased her monthly consumption of beef. This information best exemplifies the relationship between income and a(n) ______.

normal good

As people's income increases, the demand for ______ goods goes up but the demand for ______ goods goes down.

normal; inferior

All the following are the determinants of demand except ______.

price of substitutes in production

The price of ______ goods is a determinant of demand.

related

Due to the substitution effect, buyers have an incentive to buy less expensive products in place of similar products that have become ______.

relatively more expensive

The ______ suggests that at lower prices, buyers have an incentive to substitute less expensive products for similar products that are now relatively more expensive.

substitution effect

When a product's demand varies directly with money income, it is considered a(n) ______ good.

superior

Diminishing marginal ______ states that, in any specific time period, buyers will derive less satisfaction from each additional unit of the product consumed.

utility