Read & Interact: Schiller & Gephardt: Chapter 4

On average, if a person spends $50,000 per year, ________ is spent on housing.

$16,500

On average, if a person spends $50,000 per year, ________ is spent on transportation.

$8,000

Which of the following would best exemplify the most inelastic demand?

A diabetic's demand for the life-saving drug insulin.

In which of the following ways does the law of diminishing marginal utility support and exemplify consumer behavior?

A downward-sloping demand curve

All of the following goods or services would most likely exhibit relatively price inelastic demand, except:

Airline travel (in the long run)

Which one of the following best clarifies the ceteris paribus assumption?

All variables except those under immediate consideration are held constant for a particular analysis.

______ in price when a product is relatively price elastic will lead to a decrease in total revenue.

An increase

Why is the coefficient of price elasticity of demand technically a negative number?

Because price and quantity demanded are inversely related.

All of the following goods or services would most likely exhibit relatively price elastic demand, except:

Coffee

Smartphones and apps are what type of goods?

Complementary

Which of the following would be considered a luxury and thus exhibit a high price elasticity of demand?

Dining out

What type of demand is represented by a small change in price that leads to a large change in the quantity demanded?

Elastic

Which of the following would be considered a necessity and thus have a low price elasticity of demand?

Electricity

True or false: If successive units of a good yield smaller and smaller amounts of marginal utility, then the consumer will buy additional units of the good only if its price rises.

False

Which of these goods have relatively elastic demand?

Fresh fish

The idea that we strive for ever-higher levels of consumption to satisfy basic drives for security, sex, and ego gratifications is the _____ perspective of demand.

Freudian

The idea that we strive for ever-higher levels of consumption to satisfy basic drives for security, sex, and ego gratifications is the _______ perspective of demand.

Freudian

According to the law of diminishing marginal utility, what happens to additional satisfaction or utility as a consumer acquires additional units of a given product?

It decreases

If product demand is relatively elastic, what will be the effect on the total revenue if the price is increased?

It decreases.

How will the price elasticity of a product that has few substitutes compare with one that has many substitutes?

It will be less elastic.

How will the price elasticity of demand for a good that is considered to be a luxury compare to one that is a necessity?

It will exhibit a price elasticity coefficient greater than one.

All of the following goods or services would most likely exhibit relatively inelastic demand, except

New cars

Which of the following is the correct formula for calculating the price elasticity of demand?

Percentage change in quantity demanded divided by percentage change in price = %ΔQD%ΔP

How is total revenue calculated?

Price × Quantity

Which of these goods have relatively elastic demand?

Rib eye steak

Xbox and PlayStation are what type of goods?

Substitutes

Which of the following define ceteris paribus?

The idea that factors other than those being considered in a particular analysis do not change That other things remain unchanged (equal

Which of the following supports the idea that price must fall in order for quantity demanded to increase?

The law of diminishing marginal utility

Which of the following is true when the demand is unitary elastic?

The percentage change in quantity demanded is equal to the percentage change in price.

revenue is calculated by multiplying the product price by the quantity sold.

Total

What is the term that indicates the total amount the seller receives from the sale of a product in a particular time period?

Total revenue

When the price elasticity of demand is relatively price inelastic, a price increase will have what effect on total revenue?

Total revenue will rise

How is a consumer's responsiveness to price changes measured?

Using the price elasticity of demand

is the satisfaction or pleasure one gets from consuming a good or service.

Utility

When the price elasticity of demand for a product is elastic, a modest change in price causes _____ change in the quantity demanded.

a larger

The assumption that nothing else changes is known as

ceteris paribus

A consumer's choices are directly influenced by all of the following except:

costs of production

If two goods are complements and the price of one good increases, then the demand for the other good will

decrease

According to the table, if the price of fresh fish increases by 20%, the quantity bought will

decrease by 44%.

According to the table, if price of coffee increases by 20%, the quantity bought will _____.

decrease by 6%

When an economy falls into recession and people are losing jobs, demand for most products, especially big-ticket items,

decreases

Question Mode Multiple Choice Question Advertisers seek to shift the _______ curve by changing the _______ of consumers.

demand, tastes

If Janae notices that each apple she eats through the day yields a smaller amount of additional satisfaction, she is noticing the law of:

diminishing marginal utility

When Marco consumes successive slices of pizza, and each additional slice yields a smaller amount of additional satisfaction, he is experiencing the law of:

diminishing marginal utility

Combining prices and income with basic desires and preferences is the _____ explanation for demand.

economic

Psychiatrists and sociologists offer explanations for our consumption behaviors based largely on

ego and status concerns

A relatively large percentage change in quantity demanded divided by a relatively smaller change in price yields relatively price

elastic

Airline travel and new cars are two products that exhibit relatively price

elastic

Demand for Nike shoes is more ______ than overall demand for shoes.

elastic

If a 4% decline in the price of cut flowers results in an 8% increase in the quantity demanded, the price elasticity of demand for cut flowers is

elastic

The more a good or service is considered to be a "luxury" rather than a "necessity," the more ______ the price elasticity of demand.

elastic

The price ____ of demand measures the responsiveness of consumers' quantity demanded to a price change.

elasticity

The response of consumers to a change in price is measured by the price _____ of demand

elasticity

When demand is unitary elastic, the percentage change in quantity demanded is _____ the percentage change in price.

equal to

The market demand for a specific product is determined by

expectations number of consumers in the market tastes income availability and price of other goods

If marginal utility is negative as an extra unit of a good is consumed, then total utility is:

falling

When marginal utility is negative, then total utility is:

falling

If successive units of a good yield smaller and smaller amounts of marginal utility, then the consumer will buy additional units of a product only if its price ______.

falls

The downward-sloping demand curve illustrates the declining nature of marginal utility because people are willing to buy additional quantities if the price

falls

When demand is elastic, the absolute value of price elasticity of demand will be

greater than one.

The price elasticity of demand tends to be high for _____ priced goods relative to income.

higher

Expanding on the sociopsychiatric explanation for demand, economists include:

income prices

The determinants of demand include:

income tastes expectations the availability and prices of other goods

According to the table, if price of fresh fish decreases by 20%, the quantity bought will _____.

increase by 44%

If two goods are complements and the price of one good decreases, then the demand for the other good will

increase.

Eventually additional quantities of a good yield _______ increments of satisfaction.

increasingly smaller

A price increase will increase total revenue if the price elasticity of demand is relatively price

inelastic

If a 6% decrease in the price of sugar leads to a 4% increase in the quantity demanded, the price elasticity of demand for sugar is relatively price _____.

inelastic

If demand is relatively price _____ the firm can increase its total revenue by raising the price of the good.

inelastic

If demand is ______, a firm can increase total revenue by _____ prices.

inelastic, raising

Along a typical demand curve, as price falls total revenue

initially increases then decreases

Along a typical demand curve, as price rises total revenue

initially increases then decreases

Marginal utility:

is the extra satisfaction from the consumption of one more unit of some good or service

The inverse relationship between price and quantity demanded is called the

law of demand

The price elasticity of demand tends to be low for _____ priced goods relative to income.

lower

The law of diminishing _____ utility states that a

marginal

utility is the extra satisfaction or utility a consumer realizes from consuming an additional unit of a particular product.

marginal

Consumer choice is influenced not only by the ______ utility that extra units of a good will yield, but also by how much ______ must be given up to obtain extra units of the good.

marginal; income

With substitute goods, an increase in the price of one good will cause consumers to buy ____ of the other good

more

A brand-name product has _____ substitutes than a product in general and is thus more ______.

more; elastic

Because price and quantity demanded are inversely related, the price elasticity of demand coefficient will technically be a

negative

When total utility is increasing, we can conclude that marginal utility is:

positive

In the last 10 years, our annual consumption of _______ has declined.

red meat

As more of a product is consumed, total utility ______ at a diminishing rate.

rises

It is generally observed that as more of a product is consumed, total utility ______, reaches a maximum, and then ______.

rises; falls

The utility of a good is the ____ one gets from consuming a good or service.

satisfaction

We illustrate an income change with a ____ of the demand curve rather than a movement along the demand curve.

shift

A successful advertising campaign is one that

shifts demand to the right. makes demand less elastic.

The idea that we strive for ever-higher levels of consumption to receive recognition and stand out from the crowd is the _______ perspective of demand.

sociological

Because there is variation in the amount of utility that the consumption of goods or services provides, economists therefore recognize that utility is

subjective

The utility of a specific product or service may vary widely from person to person. Therefore, it is:

subjective

In the last 10 years, our annual consumption of _______ has increased.

tablet computers smartphones chicken

The percentage change in quantity demanded divided by the percentage change in price describes

the basic formula for price elasticity of demand.

If successive units of a good yield smaller and smaller amounts of marginal utility, then

the consumer will buy additional units of a product only if its price falls

The relationship between price and quantity demanded is exemplified by _____.

the demand curve

The law that says, when the additional consumption of a good yields smaller and smaller amounts of extra utility, is:

the law of diminishing marginal utility

Economists say that as we consume successive units of a good, we get smaller and smaller amounts of marginal or extra utility. This claim is known as

the law of diminishing marginal utility.

Consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are applying

the other-things-equal assumption.

Evian water and Dasani water are substitute goods. If the price of Evian water increases, the demand for Dasani water

will increase.