Econ Test 3
Demand elasticity
Extent to which a change in price causes a change in quantity demanded
Demand elasticity
Extent to which a price change causes a change in the quantity demanded
What will it take to meet the future demand for fuel?
Funding and new technology
Subsidy
Government payment to an individual, business, or other group for certain actions
Price ceiling
Government set maximum price that can be charged for goods and services
Price floor
Governments minimum price that can be charged for goods and services
Demand curve
Graph that shows the amount of a product that would be bought at all possible prices
Supply curve
Graph that shows the amount of product that would be supplied all possible prices in the market
Demand is likely to be inelastic for goods that
Have very few or no substitutes
Utility
Pleasure, usefulness, or satisfaction that people get from using a product
Equilibrium price
Point at which supply and demand achieve balance
Inelastic demand
Price changes that do not affect quantity demanded
Which factor has the most significant influence on the quantity supplied of any product?
Price of the product
Why do demand curves usually slope downward?
Price ⬆️ demand ⬇️
The vertical axis of a demand curve for a product displays?
Prices
What does the phrase the market cleared mean?
Prices reached equilibrium
Diminishing marginal utility
Principal the additional satisfaction with a product tends to go down is more units are consumed
Law of demand
Principle that quantity demanded and price move in opposite directions
Law of supply
Principle that suppliers will normally offer more for sale at higher prices and less at lower prices
Cars
Product with demand elasticity
Complements
Products that are used together
The horizontal axis of a demand curve displays
Quantities
What does a demand schedule show?
Quantities and prices
Productivity
Rate at which a company produces goods or services in relation to the amount of materials and number of employees needed
Why do supply curves typically slope upward?
Same direction Supply ⬆️ Price ⬆️
Inelastic demand
Situation in which price changes have little effect on the quantity demanded
Inelastic supply
Situation in which price changes have little effect on the quantity supplied
Demand schedule
Table that lists the quantities of a product or service that someone is willing to buy over a range of possible prices
Why do consumers in command economics face limited choices?
The Government
Shortage
Amount by which the quantity demanded is higher than the quantity supplied
Surplus
Amount by which the quantity supplied is higher than the quantity demanded
Factor affecting supply
Cost of resources
Which of the following is a characteristic of a market economy?
People have the freedom to choose from a variety of products
How do businesses react to a surplus?
Drop prices
Supply elasticity
Measure of how the quantity supplied of a good or service changes in response to changes in price
Technology
Methods or processes used to make goods and services
Profit
Money a business receives for its products or services over and above its costs
Factor affecting market demand
Number of consumers
Which of the following causes a change in demand
Number of consumers
Supply schedule
Numerical chart that illustrates the law of supply
Freedom of choice
One advantage of the price system
Which statement correctly summarizes the passage?
People are using oil faster than they are finding new sources
You demand curve shifts to the left when
People are willing to buy fewer items at all possible prices
A demand curve shifts to the right when
People are willing to buy more of the same item at any given price
The demand for goods and services in a particular area would probably increase if
A new apartment building in the area filled with families
Which factor is most likely to cause a supply of a product to decrease?
A repeal of subsidies for producers
Factors affecting demand
Changes in consumers' income, tastes, or expectations
Examples of substitutes
Coffee and tea demand
Market supply
Combined supply schedules of all businesses that provide the same good or service
Substitutes
Competing products that can be used for the same purpose
According to the information in the passage, supply of the product was influenced by
Consumer incomes
Demand for a product tends to increase when
Consumers expect a shortage
Why does the utility of a good or service often vary from one person to the next?
Consumers taste
Which sales strategy demonstrates an understanding of the principle of diminishing marginal utility?
Consumers who purchase an item at full price may purchase another item at half-price
Examples of complements
DVD players and DVDs
Individual demand
Desire, willingness, and ability of one person to buy a good or service
Demand
Desire, willingness, and ability to buy a good or service
The man's question demonstrates that he
Does not understand the relationship between supply and demand
The primary motive in business to
Increase profits
The situation described in the passage best illustrates which of the following economic principles?
Inelastic demand
Which of the following pairs of products are complements
Lightbulbs and lamps
Minimum wage
Lowest minimum amount that can be paid to most workers
Which example illustrates how changes in substitutes can influence demand?
The demand for ford cars increases when the demand of General Motors cars increases
What is the main idea of the cartoon?
The demand for gasoline is greater than the supply
Which example illustrates how changes in complements can influence demand?
The demand for light bulbs increases when the prices of lamps decrease
In the United States, prices are established primarily through
The forces of supply and demand
A surplus typically indicates that
The price is too high
What is the main purpose of government price controls
To correct unfairness in supply and demand
Market demand
Total demand of all consumers to buy a product or service
Which of the following will drive the projected increase demand for oil in the future?
Transportation needs
Government price controls
Used when the forces of supply and demand are unfair
Supply
Various quantities of a good or service that producers are willing to sell at all possible market prices
Polling consumers
Way to measure demand
Which of the following statements best answers the question posed by the man in the cartoon?
When demand increases, price increases