True/False Indicate whether the
statement is true or false.
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2.
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A desire to buy a product is the only requirement needed for demand to
exist.
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3.
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Marginal utility describes the decreasing satisfaction a consumer receives with
the purchase of each additional unit.
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4.
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A demand curve illustrates the quantity demanded at all possible prices at a
given time.
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5.
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A demand schedule is created from a demand curve.
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6.
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The Law of Demand states that more of a product will be purchased at low prices
than at high ones.
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Multiple Choice Identify the
choice that best completes the statement or answers the question.
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7.
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For most products and services, increased price results in
a. | demand for fewer products. | c. | reduced demand for
substitutes. | b. | demand for more products. | d. | increased demand for complements. |
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8.
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An increase in the price of milk causes a decrease in the demand for cereal. The
two products are
a. | substitutes. | c. | unrelated. | b. | complements. | d. | demand elastic. |
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9.
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Advertising, fashion trends, and new product introductions serve to
a. | create consumer needs. | c. | create consumer demand. | b. | increase income
effectiveness. | d. | minimize the
income effect. |
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10.
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Because a modest price increase has little or no effect, the demand for the
product is
a. | complementary. | c. | elastic. | b. | inelastic. | d. | unit elastic. |
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11.
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A demand schedule shows
a. | an upward-sloping curve that illustrates the positive relationship between price and
quantity demanded. | b. | a listing of the various quantities demanded of
a particular product at all prices that might prevail in the market. | c. | the fluctuations in
demand that occurred over a specified period of time. | d. | the fluctuations in demand scheduled to occur
over the following year. |
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12.
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Consumers' willingness to replace a costly item with a less costly item is
an example of
a. | the substitution effect. | c. | demand
elasticity. | b. | the income effect. | d. | complements. |
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13.
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An increase in the price of cameras results in a decrease in the demand for
film. The two products are
a. | substitutes. | c. | unrelated. | b. | demand elastic. | d. | complements. |
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14.
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When a customer's need for a product is not urgent, demand tends to
be
a. | inelastic. | c. | complementary. | b. | elastic. | d. | unit elastic. |
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15.
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When a manufacturer of pain medication reduced the price of the medication by
30%, profits declined by almost exactly 30%. Demand for the product is
a. | inelastic. | c. | unit elastic. | b. | elastic. | d. | complementary. |
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Completion Complete each
statement.
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16.
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A successful advertising campaign can cause a change in ____________________
which in turn causes a shift in the demand curve.
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17.
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The ____________________ demand curve is the sum of all individual demand
curves.
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18.
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When a consumer's need for a product is urgent and cannot be put off,
demand for the product is usually ____________________.
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19.
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The ____________________ test can be used to estimate demand elasticity.
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20.
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When a purchase requires a large portion of income, demand for the product is
usually ____________________.
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21.
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Demand is unit elastic if a change in price causes a ____________________ change
in quantity demanded.
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22.
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Because of the ____________________, you'll feel wealthier if the price of
entertainment drops.
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23.
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The study of how prices are determined and how individual economic decisions are
made is ____________________.
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24.
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The ____________________ states that the quantity demanded for a good or service
varies inversely with its price.
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25.
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After you've had a certain amount of your favorite food, your enjoyment
lessens. This is an example of _________________________.
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26.
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The ____________________ shifts to the left if demand for a product
decreases.
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27.
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Beef and pork are ____________________ because they can be used in place of each
other.
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Matching
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Match each statement with the correct item below. a. | measure of responsiveness that shows how a dependent variable responds to a change in
an independent variable | b. | field of economics that deals with behavior and
decision making by small units | c. | describes change in demand when a change in
price causes a relatively larger change in quantity demanded | d. | extra usefulness
gained from using one more unit of a product | e. | movement along the demand
curve | f. | desire, ability, and willingness to buy a product | g. | products used in
place of other products | h. | change in quantity demanded due to a change in
relative price | i. | listing that shows quantities demanded of a product at all prices | j. | given change in
price that causes a proportional change in quantity demanded |
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28.
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demand
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29.
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marginal utility
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30.
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demand schedule
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31.
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elasticity
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32.
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substitutes
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33.
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elastic
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34.
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microeconomics
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35.
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unit elastic
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36.
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change in quantity demanded
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37.
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substitution effect
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Match each statement with the correct item below. a. | illustrates the demand of everyone interested in purchasing a
product | b. | quantity demanded of a product varies inversely with its price | c. | study of the
economic behavior of individuals and firms | d. | extent to which a change in price causes a
change in demand | e. | decline in extra satisfaction from using additional quantities of a
product | f. | change in quantity demanded because a price change altered consumer's real
income | g. | products where the use of one product increases the use of
another | h. | willingness to buy more or less of a product at the same price | i. | graph showing the
quantity demanded at every price | j. | describes a given change in price that causes a
relatively smaller change in quantity demanded |
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38.
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demand curve
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39.
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change in demand
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40.
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Law of Demand
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41.
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complements
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42.
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market demand curve
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43.
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demand elasticity
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44.
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microeconomics
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45.
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inelastic
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46.
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diminishing marginal utility
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47.
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income effect
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Short Answer
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48.
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Analyzing Information What are three reasons that consumer demand
changes?
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49.
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Analyzing Information What are three determinants of demand elasticity?
Give an example of each.
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Essay
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50.
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Synthesizing Information Explain the income effect and how it is related
to the Law of Demand.
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51.
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Analyzing Information Choose a consumer item you use or with which you
are familiar. List its complements and substitutes, providing an explanation for each item that you
list. At current prices, what do you think the elasticity of demand is for the item? Explain your
answer.
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