Economics Ch. 4

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

How would you describe a demand curve?

A graph that shows the amount of an item a consumer will buy at each price

Why would gasoline be considered inelastic?

No matter how the price changes people will always buy it because they need it

Compare normal goods to inferior goods.

Normal Goods: demanded more when consumers income rises Inferior Goods: Demanded less when consumers income rises

How is total revenue calculated?

Product price multiplied by quantity demanded

What is consumer taste?

Products gain and lose popularity when people's desires change

How can income as a factor affect demand?

a person's ability to buy goods is affected by their income

What is a market demand schedule?

a table that summarizes all consumer's behavior

What is a market demand curve?

amount all consumers will buy at each price

Define income effect.

amount people buy changes as purchasing power of their income changes

How can income affect demand?

amount people buy changes as purchasing power of their income changes

Define income affect and create an example.

amount people buy changes as their income changes (ex. Tina can't buy a Tory Burch purse if she gets laid off and no longer has an income.)

What is the substitution effect?

amount people buy changes as they substitute products

How does market size influence demand?

as the number of consumers change so does demand

How can market size affect demand?

as the number of consumers increases/decreases so does the demand/market

As sales in digital cameras increase, so do sales of photo printers. What factor is affecting demand?

complimentary goods

What is the difference between a demand curve and a market demand curve?

demand: single consumer Market demand: whole group of consumers

What 2 factors are necessary for demand?

desire and ability to pay

How do complementary goods affect demand schedule?

increase in quantity demanded

If quantity demanded does not change significantly when prices change, how is demand described?

inelastic

What does a demand curve look like when demand is unit elastic?

large slope from top left to bottom right

What are products that consumers demand less of when their income rises?

luxury items

Define the concept of diminishing marginal utility.

marginal benefit of each additional unit declines as each unit is used

Why is electricity considered inelastic?

people will always need it no matter how the price changes

How can consumer taste affect demand?

products gain/lose popularity when consumers change their desires

Define substitution.

products used in place of one another

What do the different points on a demand curve measure?

quantity demand at a certain price

What does elasticity of demand measure?

quantity demand at a certain price

According to the law of demand, what happens when prices go down?

quantity demand goes up

When demand is elastic, how does the percentage change in quantity demanded compare to the percentage change in price?

quantity demanded changes greatly as price changes

What do various points on a demand curve represent?

quantity sold at a certain price

What would be some examples of inelastic demand?

salt, insulin, gas

What is the purpose of an individual demand curve?

show the amount of an item a consumer will buy at a certain price

What explains the shape of a demand curve?

slopes down from the top left to the bottom right with the prices on the vertical line and quantity on the horizontal

What assumption is used when making demand curves?

the quantity each person wants

What are the purposes of a market demand schedule?

to summarize all consumer behavior

What does an inelastic demand curve look like?

top left to bottom right at a short decrease

What is the purpose of Market research?

used to see what consumers want and also be used to create market supply schedule

According to the law of demand, what is the relationship between quantity demanded and price?

when price goes up, quantity demanded goes down and vise versa

Define the elasticity of demand.

when quantity demanded changes as prices change

Make up an example of consumer expectation.

when the new iphone comes out people will wait to get it once the price drops


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