Economics Chapter 4 Section Quiz

What is the relationship between income and demand?

An increase in income increases demand.

Which is a likely complement to a tablet computer?

Apps

Why is a demand curve downward sloping?

Because diminishing marginal utility affects quantity of purchase

Why is the Law of Demand called a "law"?

Because it has been demonstrated repeatedly

(T/F) Demand is elastic when a given change in price causes a relatively smaller change in quantity demanded.

False

(T/F) The sole determinant of elasticity is the answer to this question: Can the purchase be delayed?

False

(T/F) To estimate elasticity, add the direction of a price change to the direction of the change in total revenue, or total expenditures.

False

(T/F) Demand is unit elastic when a given change in prices causes a proportional change in quantity demanded.

True

(T/F) Prices act as a motivating influence, or incentive, that causes an individual to take action.

True

Demand elasticity is the extent to which a change in price causes a change in the quantity demanded.

True

To determine elasticity, which question would an economist ask?

What portion of the consumers's income is required for the purchase?

Consumer demand for different amounts at every price, causing the demand curve to shift to the left or the right is called

a change in demand.

Movement along the demand curve showing that a different quantity is purchased in response to a change in price is called

a change in quantity demanded.

A demand schedule is best described as __________.

a graph.

For which product is demand likely to be the most elastic?

a product with many adequate substitutes

Consider the term marginal utility. Which word is the best synonym for marginal?

additional

Prices for common vegetables tend to be elastic. Why?

because other vegetables are available.

Products related in such a way that an increase in the price of one reduces the demand for both are called

complements

When the price of something increases, the quantity demanded

decreases

The desire, ability, and willingness to buy a product or service is called

demand

An economist performs a total expenditures test and finds that a change in price and a change in revenue move in opposite directions and concludes that the test shows __________.

demand is elastic.

As people use more and more of a product, they encounter _______________.

diminishing marginal utility.

The Law of Demand states that the quantity demanded of a product varies _______ with its price.

inversely

The _________________ shows the quantities demanded by everyone who is interested in purchasing a product at all possible prices

market demand curve

A change in quantity demanded is represented by __________.

movement along the demand curve.

What is the main cause of a change in quantity demanded?

price

Products related in such a way that an increase in the price of one increases the demand for the other are called

substitutes

The portion of a change in quantity demanded caused by a change in a consumer's income when the price of a product changes is called

the income effect.

Which of the following is most closely related to relative prices?

the substitution effect

Which term refers to the idea that price causes a proportional change in quantity demanded?

unit elastic.