(ECON) Chapter 4 Study Guide

inelastic

when demand is _____, a fall in price causes total revenue to rise because the increase in quantity sold is large enough to offset the lower price

left

when factors other than price cause demand to fall, the demand curve shifts to the _____

coffee

which of the following goods would have the most inelastic demand? airline travel, coffee, luxury cars, and tires

demand curve

a _____ illustrates the quantities demanded at each price by consumers.

price

a demand curve is an accurate tool for predicting the decisions of consumers as long as there are no changes other than _____ that could affect consumers.

demand

for most goods, a rise in people's income means that there will be an increase in _____.

consumer expectations

if a consumer is waiting to buy wrapping paper he or she found at walmart until after christmas, _____ is the factor that is most likely influencing his or her decision to wait.

increase

if a firm knows that the demand for its product is inelastic at its current price, it knows that an increase in price will _____ total revenue.

unitary

if elasticity is exactly equal to 1, demand is _____.

elastic

if the elasticity is greater than 1, demand is _____

inelastic

if the elasticity of demand for a good at a certain price is less than 1, demand is _____

chemotherapy

of the following, demand is likely to be least elastic for pink grapefruit, iceberg lettuce, chemotherapy, or emeralds

percentage change

original number - new number / original number x 100

elasticity

percentage change in quantity demanded / percentage change in price = _____

rises / elastic

producers' total revenue will decrease if the price _____ and demand is _____.

rises / inelastic

producers' total revenue will increase if the price _____ and demand is _____.

chick-fil-a nuggets, chicken nuggets, fast food

rank these three items in terms of the elasticity of the demand for them at any given price, from most elastic to least elastic: fast food, chicken nuggets, and chick-fil-a nuggets

elastic

the demand for a good is _____ if an increase in its price results in a decrease in total revenue.

price / buy

the law of demand says the lower the _____, the more consumers will _____.

substitutes

the more _____ available for a product, the larger is its price elasticity of demand.

demand

the shift to the right in a demand curve means an increase in _____.

rises

the substitution effect is when the price of a good _____, people will substitute other products.