Chapter 4, 5,6 Test

Question 1

demand

Answer 1

desire to have some good or service and the ability to pay for it.

Question 2

law of demand

Answer 2

when price of a good or service falls, consumers buy more of it

Question 3

demand schedule

Answer 3

show how much of a good or service an individual is willing and able to purchase at each price in a market

Question 4

market demand schedule

Answer 4

shows how much of a good or service all consumers are willing and able to buy at each price in a market

Question 5

demand

Answer 5

graph that shows how much of a good or service an individual will buy at each price

Question 6

market demand curve

Answer 6

shows the quantity that all consumers or the market as a whole are willing and able to buy at each price

Question 7

law of diminishing marginal utility

Answer 7

the marginal benefit from using each additional unit of a good or service during a given time period tends to decline as each is used

Question 8

income effect

Answer 8

a change in the amount of a product that a consumer will buy because the purchasing power of his or her income changes.

Question 9

substitution effect

Answer 9

the pattern of behavior that occurs when consumer react to a change in the price of a good or service by buying a substitute product

Question 10

change in quantity demand

Answer 10

a change in the amount of a product that consumers will buy because of a change in price

Question 11

change in demand

Answer 11

occurs when a change in the marketplace such as high unemployment prompts consumers to buy different amounts of a good or service et every price

Question 12

normal goods

Answer 12

goods that consumers demand more of when their incomes rise.

Question 13

Inferior goods

Answer 13

goods that consumers demand less of when their incomes rise.

Question 14

substitutes

Answer 14

goods and service that can be used in place of other goods and services to satisfy consumer’s wants

Question 15

complements

Answer 15

when the use of one product increases the use of another product

Question 16

elasticity of demand

Answer 16

used to describe how responsive consumers are to price changes in the marketplace

Question 17

Elastic

Answer 17

when a change in price, either up or down, leads to a relatively larger change in the quantity demanded

Question 18

Inelastic

Answer 18

when a price leads to a relatively smaller change in the quantity demanded

Question 19

unit elastic

Answer 19

when the percentage change in price and quantity demanded are the same

Question 20

Total Revenue

Answer 20

the amount of money a company receives for selling its products

Question 21

Total Revenue Test

Answer 21

measured by comparing the total revenue a business would receive when offering its product at various prices.

Question 22

Supply

Answer 22

the willingness and ability of producers to offer goods and services for sale

Question 23

law of supply

Answer 23

producers are willing to sell more of a good or service at a higher price than a lower price

Question 24

supply schedule

Answer 24

table that shows how much of a good or service an individual producer is willing and able to offer for sale at each price in a market

Question 25

market supply schedule

Answer 25

a table that shows how much of a good or service all producers in a market are willing and able to offer for sale at each price

Question 26

supply curve

Answer 26

graph that shows how much of a good or service an individual producer is willing and able to offer for sale at each price

Question 27

market supply curve

Answer 27

shows the data from the market supply schedule

Question 28

marginal product

Answer 28

change in total product that results from hiring one or more worker

Question 29

specialization

Answer 29

Having each worker focus on a particular facet of production

Question 30

increasing returns

Answer 30

each new worker adds more to total output than the last, as shown by the marginal product

Question 31

diminishing returns

Answer 31

each new worker causes total output to grow but at a decreasing rate

Question 32

fixed costs

Answer 32

expenses that the owners of a business must incur whether they produce nothing, a little, or a lot

Question 33

Variable Costs

Answer 33

business costs that vary as the level of production output changes

Question 34

total cost

Answer 34

found by adding fixed and variable costs together

Question 35

marginal costs

Answer 35

the additional cost of producing one more unit of their product

Question 36

marginal revenue

Answer 36

money made from each additional unit sold

Question 37

total revenue

Answer 37

income a business receives from selling a product

Question 38

profit-maximizing output

Answer 38

when marginal cost and marginal revenue are equal