Chapter 2 Flashcards
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
Quantity demanded refers to the:
amount of a product that consumers are willing to purchase at a certain 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
A demand schedule:
is a table that expresses possible combinations of prices and quantities demanded of a product
The demand curve shows the relationship between:
price and quantity demanded, of which price is the independent variable on the vertical axis
Graphically, the market demand curve is:
the horizontal sum of individual demand curves
When an economist says that the demand for a product has increased, he or she means that:
consumers are now willing to purchase more of this product at every price
The demand curve for chocolate shifts to the right if:
) medical studies conclusively find that chocolate helps fight migraines
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:
there are few goods that are substitutes for bicycles
Which of the following is most likely to be an inferior product?
used clothing
- 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
Digital music players and digital music are:
complementary products
. If the price of K declines, the demand curve for complementary product J:
shifts to the right
Ceteris paribus, which of the following might shift the demand curve for gasoline to the left?
the development of a low-cost electric automobile
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
An increase in demand means that:
the quantity demanded at every price is greater than before
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
Assume that the demand curve for product C is downward-sloping. If the price of C falls from $2 to
$1.75, then:
a larger quantity of C is demanded
The law of supply indicates that:
producers will offer more of a product at high prices than they will at low prices
The law of supply:
reflects the direct relationship between price and quantity supplied, ceteris paribus
A supply curve:
is a graph that expresses possible combinations of prices and quantities supplied of a product
The supply curve shows the relationship between:
price and quantity supplied, with price as the independent variable on the vertical axis
If businesses offer a lower quantity supplied than previously at every possible price, the result is
a(n):
decrease in supply
A leftward shift of a product’s supply curve might be caused by a(n):
decrease in the number of businesses in an industry
An increase in the wages of construction workers will:
shift the supply curve of new homes to the left
An improvement in production technology will:
shift the supply curve to the right
