Chap 4 Economics
movement along the demand curve.
A change in quantity demanded is represented by ______
data
A demand schedule is best described as _______
diminishing marginal unit
A hungry man is willing to pay a high price for food. After he is no longer hungry, he is not willing to pay the same high price. Which of the following best defines this example?
demand is elastic
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 ________
Diminishing Marginal Utility
As people use more and more of a product, they encounter ____________________.
inverse
Changes in quantity demanded and changes in price have a(n) _________ relationship.
additional
Consider the term marginal utility. Which word is the best synonym for marginal?
true
Demand elasticity is the extent to which a change in price causes a change in the quantity demanded.
false
Demand is elastic when a given change in price causes a relatively smaller change in quantity demanded.
ability
Demand is the desire, ____________________, and willingness to buy a product or service.
true
Demand is unit elastic when a given change in price causes a proportional change in quantity demanded.
a product with many adequate substitutes
For which product is demand likely to be the most elastic?
change in price
On a demand curve, movement along the curve, as opposed to a shift in the entire curve, is a result of _________
incentive
Prices act as a motivating influence, or ____________________ , that causes an individual to take action.
because other vegetables are avalible
Prices for common vegetables tend to be elastic. Why?
inversely
The Law of Demand states that the quantity demanded of a product varies ____________________ with its price.
quantities demanded
The market demand curve that shows the ____________________ by everyone who is interested in purchasing a product at all possible prices.
false
The sole determinate of elasticity is the answer to this question: Can the purchase be delayed?
What portion of the consumer's income is required for the purchase?
To determine elasticity, which question would an economist ask?
false
To estimate elasticity, add the direction of a price change to the direction of the change in total revenue, or total expenditures.
direction, direction
To estimate elasticity, compare the _________ of a price change to the _________ of the change in total revenue.
the desire, ability, and willingness to buy a product
What are the characteristics of demand?
a change in quantity demanded caused by a change in consumer income
What is the income effect?
change in price
What is the main cause of a change in quantity demanded?
An increase in income increases demand.
What is the relationship between income and demand?
total expenditures
What test do economists use to measure elasticity?
decreases
When the price of something increases, the quantity demanded _______
apps
Which is a likely complement to a tablet computer?
the substitution effect
Which of the following replaces a costly item with a less costly one?
a vital medicine
Which product most likely has a demand that is inelastic?
unit elastic
Which term refers to a changing price that causes a proportional change in total revenue?
donut
Which would an economist consider a likely complement for coffee?
tea
Which would an economist consider a likely substitute for coffee?
because quantity demanded increases as price decreases
Why is a demand curve downward sloping?
because it has been demonstrated repeatedly
Why is the Law of Demand called a "law"?
demand
combination of desire, ability, and willingness to buy a product ________
change in demand
consumer demand for different amounts at every price, causing the demand curve to shift to the left or the right ________
change in demand
different amounts demanded at every price, causing the demand curve to shift to the left or the right ________
demand curve
graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time ________
change in quantity demanded
movement along the demand curve showing that a different quantity is purchased in response to a change in price ________
income effect
portion of a change in quantity demanded caused by a change in a consumer's income when the price of a product changes ________
substitutes
products related in such a way that an increase in the price of one increases the demand for the other ________
complements
products related in such a way that an increase in the price of one reduces the demand for the other
complements
products related in such a way that an increase in the price of one reduces the demand for the other ________
law of demand
rule stating that more will be demanded at lower prices and less at higher prices ________
marginal utility
satisfaction or usefulness obtained from acquiring one more unit of a product ________
demand elastic
the extent to which a change in price causes a change in the quantity demanded _______
substitution effect
the portion of a change in quantity demanded caused by a change in price that makes other products more or less costly ________
inelastic
type of elasticity in which the percentage change in the independent variable (usually price) causes a less than proportionate change in the dependent variable (usually quantity demanded or supplied)
