Chapter 4

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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


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