Econ ch. 3
1. Substitutes 2. Buying power 3. Diminishing marginal utility 4. Diminishing personal value
Four factors that explain why a price change affects the amount people want to buy and use
Substitutes
A good or service that can replace another good or service
Price elasticity of demand
A measure of the impact of the price effect
Law of demand
An inverse relationship between the quantity demanded and the price of the product
Price elasticity of demand
Economists use _____________ to measure the impact of the price effect
Total revenue
If a company increases the price of an inelastic product it's _____ would increase
C. the demand for water saving shower heads will shift to the right
If the price of water increases, a. the demand for desert-type landscaping will shift to the left b. The demand for water will shift to the left c. The demand for water saving shower heads will shift to the right d. the demand for bath soap will shift to the right
C. is shown by the entire demand curve
Jami's demand for tacos a. depends on the price he has to pay b. is 7 tacos per month c. is shown by the entire demand curve d. is 15 tacos per month, since this is the largest quantity he will buy
Individual
Market demand is the sum of all ______ demands for a product
B. Inelastic
Pizza Villa increased the price of its deluxe pizza from $10.50 to $11. As a result of this increase in price, total sales for the deluxe pizzas increased by $1,000 per month. The demand for this product is a. elastic b. inelastic c. diminishing d. increasing
Complementary goods
Products that are often used together
Demand
Quantities of a particular good or service consumers are willing and able to buy at different prices at a particular time
Price effect
The curves shape (sloping down and to the right) shows_______
Price effect
The inclination of people to buy less of something at a higher prices than they would they would buy at lower prices
Diminishing marginal utility
The point reached when an additional unit of a product consumed is less satisfying than the one before it
Buying power
The quantity of goods and services a person can buy with a given amount of money
Market demand
The total of all individual demands in a given market at a particular time
a. The amount of household waste remains the same
Waste disposal companies begin charging households more for each can of garbage they collect. Which of the following is least likely to happen as a result? a. The amount of household waste stays the same b. Households recycle more c. Households move up their demand curve for waste disposal services d. Households demand fewer packaging materials in the goods they buy
falls; strong
When total revenue _____, then demand is elastic; price effect is ______.
increase;weak
When total revenue ______, then demand is inelastic; price effect is ______.
D none of the above
Which of the following best describes the way economists view people's gasoline purchases? a. People need gas b. there are no substitutes for gas, so people will pay any price to maintain consumption at a given level c. Both of the above d. none of the above
b. news that insects have destroyed much of the peanut crop
Which of the following is likely to increase the demand for peanut butter? a. fewer children in the population b. news that insects have destroyed much of the peanut crop c. A big increase in the price of jelly d. A report from the Surgeon General of the United States that eating peanut butter makes people nutty
total revenue
a product's price multiplied by the number of units sold
1. Availability of substitutes 2. Percentage of budget 3. Time
elasticity of demand is different for each product because of....(3 things)
change in demand
people want to buy less of a product at all possible prices
A. Total revenue increases with each decrease in price
the demand for a good is elastic when a. total revenue increases with each decrease in price b. total revenue decreases with each decrease in price c. Price changes have no effect on total revenue d. the demand curve shifts to the right
weather, income, time, substitutes, complementary goods, number of buyers, trends, expectations
what causes a shift in demand?
price x quantity sold
what is the total revenue equation?
large
when price effect is _____, demand is elastic
small
when price effect is ______, demand is inelastic
A salt
which of the following items is likely to have the most inelastic demand? a. salt b. Chocolate-covered doughnuts at Doni's Donuts at the corner of the 5th and Avalon c. Home computers d. Broccoli
