Name: 
 

                                                    Chapter 4 Review Guide



True/False
Indicate whether the statement is true or false.
 

 2. 

A desire to buy a product is the only requirement needed for demand to exist.
 

 3. 

Marginal utility describes the decreasing satisfaction a consumer receives with the purchase of each additional unit.
 

 4. 

A demand curve illustrates the quantity demanded at all possible prices at a given time.
 

 5. 

A demand schedule is created from a demand curve.
 

 6. 

The Law of Demand states that more of a product will be purchased at low prices than at high ones.
 

Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 7. 

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.
 

 8. 

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.
 

 9. 

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.
 

 10. 

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.
 

 11. 

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.
 

 12. 

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.
 

 13. 

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.
 

 14. 

When a customer's need for a product is not urgent, demand tends to be
a.
inelastic.
c.
complementary.
b.
elastic.
d.
unit elastic.
 

 15. 

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.
 

Completion
Complete each statement.
 

 16. 

A successful advertising campaign can cause a change in ____________________ which in turn causes a shift in the demand curve.
 

 

 17. 

The ____________________ demand curve is the sum of all individual demand curves.
 

 

 18. 

When a consumer's need for a product is urgent and cannot be put off, demand for the product is usually ____________________.
 

 

 19. 

The ____________________ test can be used to estimate demand elasticity.
 

 

 20. 

When a purchase requires a large portion of income, demand for the product is usually ____________________.
 

 

 21. 

Demand is unit elastic if a change in price causes a ____________________ change in quantity demanded.
 

 

 22. 

Because of the ____________________, you'll feel wealthier if the price of entertainment drops.
 

 

 23. 

The study of how prices are determined and how individual economic decisions are made is ____________________.
 

 

 24. 

The ____________________ states that the quantity demanded for a good or service varies inversely with its price.
 

 

 25. 

After you've had a certain amount of your favorite food, your enjoyment lessens. This is an example of _________________________.
 

 

 26. 

The ____________________ shifts to the left if demand for a product decreases.
 

 

 27. 

Beef and pork are ____________________ because they can be used in place of each other.
 

 

Matching
 
 
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
 

 28. 

demand
 

 29. 

marginal utility
 

 30. 

demand schedule
 

 31. 

elasticity
 

 32. 

substitutes
 

 33. 

elastic
 

 34. 

microeconomics
 

 35. 

unit elastic
 

 36. 

change in quantity demanded
 

 37. 

substitution effect
 
 
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
 

 38. 

demand curve
 

 39. 

change in demand
 

 40. 

Law of Demand
 

 41. 

complements
 

 42. 

market demand curve
 

 43. 

demand elasticity
 

 44. 

microeconomics
 

 45. 

inelastic
 

 46. 

diminishing marginal utility
 

 47. 

income effect
 

Short Answer
 

 48. 

Analyzing Information What are three reasons that consumer demand changes?
 

 49. 

Analyzing Information What are three determinants of demand elasticity? Give an example of each.
 

Essay
 

 50. 

Synthesizing Information Explain the income effect and how it is related to the Law of Demand.
 

 51. 

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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