Economic Chapter 4 Test
. Define a change in quantity demanded, and describe what causes it.
A change in quantity demanded is a movement along the demand curve showing that a different quantity is purchased in response to a change in price. Only caused by a change in price.
What is a demand schedule? How does a demand schedule help us understand the effect of changes in price on the amount demanded?
A demand schedule is a listing showing the quantity demanded at all possible prices that might prevail in the market at a given time. It shows the demand curve, which tells you
How does a market demand curve differ from a demand curve? How are they similar?
A market demand curve shows the quantities demanded by everyone who is willing and able to purchase a product. They both show quantities demanded at any given time.
What causes the demand curve to shift to the right? To the left?
A shift to the right shows an increase in demand, while a shift to the left shows a decrease in demand.
Describe the relationship in demand between a product and its complement(s)
An increase in the price of a good usually leads to a decrease in the demand for its compliment. A decrease in the price of a good tends to increase the demand for its compliment.
Explain the difference between a demand schedule and a demand curve. Would there be a reason to use one rather than the other?
Demand schedule is a listing and demand curve is a graph.
. When a purchase requires more of a person's income, it tends to be ______. However, if the costly purchase is for a product or service a person needs urgently, the demand becomes more _______.
Elastic, inelastic
What kind of science is economics? What is a "law" in science?
It is a social science. A law in science is when a theory proves true after repeated tests and it fits within our larger understanding of the field.
What does the Law of Demand state?
Quantity demanded varies inversely with its price
Describe the relationship in demand between a product and its substitutes.
The demand of a product tends to increase if the price of its substitute goes up. The demand tends to decrease if the price of its substitute goes down.
Explain the concept of marginal utility. Why is diminishing marginal utility important to the demand curve?
The extra usefulness or additional satisfaction a person gets from acquiring or using one more unit of a product. Diminishing marginal utility is important because demand declines.
Explain how consumer tastes affect demand.
The more popular an object is, the more people buy it. As a result the demand curve shifts to the righ
What are the two variables needed to calculate demand?
The price of product and the quantity available at a given point in time.
. How is the substitution effect different from the income effect?
The substitution effect is similar to the income effect but it involves replacing the original product bought with a cheaper one.
Why would the number of consumers in a market shift the demand curve left or right?
When more consumers enter the market, there are more people buying and demanding products.
How do substitution effects and income effects affect the demand curve?
When people buy a product that is cheaper they are likely to afford more product, therefore shifting the demand curve.
Why would consumer income change demand?
When people earn more, they are willing to pay different amounts at all possible prices.
Explain how the income effect can make customers feel richer and, therefore, more likely to purchase greater quantities.
When the price of a product drops, they can buy the same quantity but have money left over, and with the money that was left they might even want to buy more of the product.
Can expectations change the demand for products? Why or why not?
Yes, one can hold off from buying something or stock up on something because of expectations.
Change in price and change in revenue move in opposite directions
elastic
Generally, the more available substitutions are, the more ____ the demand is. The ______ of the market can affect demand elasticity in cases of substitutions.
elastic, adequate
. Demand is ___ when the price change results in a relatively larger change in quantity demanded. People ___ need products urgently with this type of demand.
elastic, do not
If you cannot put off purchase of a product, demand is ____. If you can wait, demand is ____.
elastic, inelastic
Change in price and change in revenue move in the same direction.
inelastic
Demand is ___ when the price change results in a relatively smaller change in quantity demanded. People ___ need products urgently with this type of demand.
inelastic. do
Total expenditures (or total revenue) is found by multiplying the ______ of a product by the _____ _ for any point along the ____ curve.
price,quantiy demanded, demand
When businesses raise prices on products with inelastic demand, total revenues are more likely to _____ than when prices are increased on product with elastic demand.
sale
. Price change has no effect on revenue. _
unit elastic
Demand is ___ when the price change results in a proportional change in quantity demanded. This type of demand is __ to find.
unit elastic,difficult
