Chapter 1 Review Flashcards
An economic model usually includes:
two or more factors that have measurable values
Economists use the term demand to refer to:
the relationship between the various possible prices of a product and the quantities that consumers
are willing to purchase at each price
The law of demand states that:
price and quantity demanded are inversely related
One reason that the quantity demanded of a product increases when its price falls is that
the product has greater value in terms of satisfaction per dollar spent
The demand curve for a product may have a positive (upward) slope when:
the “Veblen effect” applies
An economist for a bicycle company predicts that, ceteris paribus, a rise in consumer incomes
increases the demand for bicycles. This prediction is based upon the assumption that:
bicycles are normal products
- A rightward shift in the demand curve for product C might be caused by a(n):
increase in income if C is a normal product
If the price of K declines, the demand curve for complementary product J:
shifts to the right
One might explain a shift to the right in the demand curve for normal product A by saying that:
preferences have changed in favour of A, so consumers now want to buy more at every price
Which of the following causes the demand curve for product A to shift to the left?
a general expectation that the price of A will decrease in the near future
Which of the following does not cause the demand for product K to change?
a change in the price of K
The quantity demanded of a product increases as its price declines because the lower price:
results in a move down the demand curve
