Chapter 4
A(n) _____ exists in any place where people come together to buy and sell goods or services.
market
A(n) _______ is something for which the demand remains unchanged as income rises or falls.
neutral good
___________ are those things for which the demand rises as income rises and falls as income falls.
normal good
One of the most important factors in determining whether or not the demand for a product is elastic is whether or not substitutes for it exist.
true
Pespi and Coke can be considered substitutes.
true
Price is the only factor that can cause a change in quantity demanded.
true
Price is the only factor that causes a change in quantity demanded.
true
Quantity demanded is determined by price.
true
The law of diminishing marginal utility states that consumers value the first unit of a good more highly than an additional of the same unit.
true
A market is any place
where buyers and sellers meet.
A shift of the demand curve represents
a change in demand.
Which of the following will not change the demand for a product?
a change in the price of the product
On a demand curve, a change in quantity demanded is represented by
a movement along the curve
The law of demand can be represented
all of the above.
When buyers are willing and able to purchase different quantities of a good at different prices, it demonstrates that their _______ is higher.
demand
The concept of demand that deals with the relationship between price and quantity demanded is called
elasticity
Demand and quantity demanded are basically the same.
false
Demand curves slope upward from left to right.
false
If a good has many substitutes, it can be considered inelastic.
false
If a seller increases the price of a good, it will always bring about an increase in total revenue.
false
If movie prices increase by 30% and attendance drops by 40%, demand is considered inelastic.
false
If the demand for chocolate increases, the demand curve shifts to the left.
false
If demand for a good is elastic and its price decreases, total revenue
goes up.
Elasticity of demand measures
how much buyers respond to a change in price
Buyers are more responsive to price changes for goods on which they spend a larger percentage of their income.
true
Chocolate bars, tropical vacations, and automobiles are all elastic goods.
true
Demand schedules and demand curves contain the same information presented in different ways.
true
Economists state that the more utility you receive from an item, the higher price you are willing to pay for it.
true
Elasticity is really measuring consumer response to a price change.
true
One critical determinant of elasticity is whether or not substitutes exist.
true
When buyers will purchase the same amount of a good, even though the price has increased, the demand for that item is
inelastic
If demand for a particular good falls as income rises, it is called a(n)
inferior good
If the demand for computers increases, the demand curve will
shift to the right.
Demand curves
slope downward from left to right.
With complementary goods, which of the following occurs?
the demand for one good moves in the opposite direction as the price of the other good
When goods are substitutes, which of the following occurs?
the demand for one good moves in the same direction as the price of another good
A demand curve is a graph that may contain a straight line that slopes downward from left to right.
true
A movement along the demand curve to a different point illustrates price change on a graph.
true
A shift of the curve means that the curve either moves left or right.
true
As income rises, demand for normal goods rises.
true
