Econ chapter 4

Change in Quantity Demanded

*Change in price only *Movement along the demand curve *Change in price alters consumers' income

Change in Demand

*Demand curve shifts right to show an increase *Demand curve shifts left to show a decrease *Affected by changes in consumer income *Affected by changes in consumer tastes *Affected by future expectations *Affected by number of consumers *Affected by the price of related goods

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?

diminishing marginal utility

To estimate elasticity, compare the _____ of a price change to the _____ of the change in total revenue.

direction;direction

Which would an economist consider a likely complement for coffee?

donuts

To estimate elasticity, add the direction of a price change to the direction of the change in total revenue, or total expenditures.

false

Why is a demand curve downward sloping?

because quantity demanded increases as price decreases

What is the main cause of a change in quantity demanded?

change in price

Based on the graphs, which of the following statements are accurate? Select all that apply.

*Both the individual and market demand curves show that the two most important measures of demand are price and quantity. *Market demand curves show that when the price of a product decreases, buyers have an incentive to purchase more, and so the quantity demanded goes up.

Increased Market Demand

*Lower Prices *Incentive *Higher satisfaction *Downward sloping demand curve *Goal of advertising

Quantity demanded graph: check the following that apply

*The demand curve itself does not move in response to changes in quantity demanded; movement takes place only along the demand curve. *The only factor that causes a change in the quantity demanded is a change in price.

Elastic and inelastic demand graphs: check all that apply

*The steep line of inelastic demand (from point a to point b) indicates great change in price yet very little change in quantity demanded. *Elastic demand shows a product with a great change in price accompanied by an even greater percentage change in quantity demanded.

Demand is elastic when a given change in price causes a relatively smaller change in quantity demanded.

false

The sole determinate of elasticity is the answer to this question: Can the purchase be delayed?

false

Which would an economist consider a likely substitute for coffee?

tea

What are the characteristics of demand?

the desire, ability, and willingness to buy a product

Demand elasticity is the extent to which a change in price causes a change in the quantity demanded.

true

Demand is unit elastic when a given change in price causes a proportional change in quantity demanded.

true

​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)

A change in quantity demanded is represented by ______

Movement along the demand curve.

What is the relationship between income and demand?

An increase in income increases demand.

Changes in quantity demanded and changes in price have a(n) _____ relationship.

Inverse

On a demand curve, movement along the curve, as opposed to a shift in the entire curve, is a result of ___

a change in price

What is the income effect?

a change in quantity demanded caused by a change in consumer income

Which product most likely has a demand that is inelastic?

a vital medicine

Why is the Law of Demand called a "law"?

because it has been demonstrated repeatedly

Decreased Market Demand

*Higher Prices *Diminishing marginal unit *Lower satisfaction

Prices for common vegetables tend to be elastic. Why?

because other vegetables are available