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