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______________ indicates how much of a product consumers are both willing and able to buy at each possible price given a period of time.
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The law of demand states that price and quantity demanded have a(n) ________________ relationship.
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Ch. 4-Demand
Demand
| Question | Answer |
|---|---|
| ______________ indicates how much of a product consumers are both willing and able to buy at each possible price given a period of time. | Demand |
| The law of demand states that price and quantity demanded have a(n) ________________ relationship. | inverse |
| As price goes up, the quantity demanded goes _______ , and as price goes down, the quantity demanded goes _________. | down; up |
| The _____________ states that when the price of a product goes up, people will substitute for a cheaper good. | substitution effect |
| The _________ is when an individual's income can buy more of all goods when the price of one good declines. | income effect |
| The __________ states that as a person consumes additional units of a good, eventually the utility gained from each additional unit of the good decreases. | law of diminishing marginal utility |
| A __________________________ is a table that shows how much of a product consumers demand at various prices. | demand schedule |
| _________________________________ is the amount of product that consumers are willing an able to buy at a specific price. | Quantity demanded |
| The sum of the individual demands of all consumers in the market is called the ______________________________. | market demand |
| Price is always shown on the _________________ axis and quantity is always shown on the ___________________ axis in economics. | vertical (y); horizontal (x) |
| The demand curve slopes _________ and has a _____________ slope. | down; negative |
| Elasticity of demand is equal to _________ divided by __________. | percentage change in quantity; percentage change in price |
| Demand is _____________ if greater than 1.0, ______________________ if equal to 1.0 and __________________ if less than 1.0 | elastic; unit-elastic; inelastic |
| Total revenue equals _________ multiplied by the ________________________. | price; quantity demanded |
| Lowering the price of a demand elastic good will _____________ (increase / decrease) the total revenue. | increase |
| Which of the following is NOT a factor that will affect the elasticity of demand? A. time B. number of consumers C. availability of substitutes D. price of the good relative to income E. luxury vs. necessity | number of consumers |
| The greater the availability of substitutes for a good, the greater the good’s _________________ of demand. | elasticity |
| Luxury goods tend to be more demand _______________ as compared to necessities. | elastic |
| The more important a good is as a share of a consumer’s budget, the more price ________________ is the demand for the good. | elastic |
| The less time a person has to adjust to price changes, the more price __________ is the demand for the good. | inelastic |
| The elasticity of demand is greater in the ______________ because consumers have more time to adjust. | long-run |
| The demand for a(n) ___________ good increases as money income increases, the demand for an ____________ good actually decreases as money income increases. | normal; inferior |
| Products that can be used in place of each other are called _________________. | substitutes |
| Certain goods that are often used in combination are called _________________. | complements |
| A _________________ is caused by a change in price and results in a change in the quantity demanded. | movement along the demand curve |
| A ___________ is caused by one of the determinants of demand other than price and results in a new demand curve. | shift in the demand curve |
| A change in preferences in favor of a good shifts the demand curve to the ___________ . | right |
| An increase in income shifts the demand curve of normal goods to the _________ . | right |
| An increase in income shifts the demand curve of inferior goods to the _________ . | left |
| An increase in income will not cause a shift in either direction of a demand curve for _______________ goods. | neutral |
| With complementary goods, the demand for one good moves in the ___________ direction as the price of the other good. | opposite |
| With substitutes, the demand for one good moves in the ____________ direction as the price of the other good. | same |
| Which of the following is not a factor that causes a shift in demand? A. change in consumer income B. prices of related goods C. consumer tastes D. expectations E. Size or composition of population F. none of the above (they all cause shifts) | none (they all cause shifts) |
| If the price of a good goes up by 5% and the quantity demanded goes down 15% then the elasticity of demand is equal to ____ and the good is price ____. | 3; elastic |
| What explains the law of demand? A. substitution effect B. income effect C. law of diminishing marginal utility D. all of the above | all of the above (substitution effect; income effect; law of diminishing marginal utility) |
| A ____________ is the graphical representation of the law of demand. | demand curve |
| The elasticity of demand measures how __________ quantity demanded is to price change. | responsive |
| _________ or preferences are your likes and dislikes as a consumer. | Tastes |
| A __________________ is the graphical representation of the law of demand. | demand curve |
| The three things that explain the law of demand are : | substitution effect; income effect; law of diminishing marginal utility |
| The determinants (cause shifts) of demand are: | (1)ncome; (2)Tastes; (3) Price of a substitute or Price of a complement; (4) Expectations; (5) Size or Composition of the Population |
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teacherdavidfrost
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