Chapter 4 Economics Flashcards
What two factors are necessary for demand?
Desire for good or service and its availability in the market
An actress sets off a craze for wearing camouflage clothing among her fans. What factor is affecting demand?
Consumer Taste
What is a market demand curve?
A graph showing how much of a product a market is willing and able to buy
What do business owners use to gather information for market demand schedules?
Market Research
What type of curve slopes downward from left to right?
Demand Curve
How is total revenue calculated?
Price multiplied by quantity sold
Which economic concept is defined as the measure of how responsive consumers are to price change?
Elasticity of Demand
What term is defined as the change in the amount consumers will buy because they can buy a different product instead?
Substitution Effect
The law of diminishing marginal utility explains the shape of a
Demand curve
What term is defined as goods that consumers demand more of when their incomes rise?
Normal Goods
A factory closes, laying off hundreds of workers, and consumer spending in the town falls. What factor is affecting demand?
Income
If quantity demanded does not change significantly when price changes, how is demand described?
Inelastic
Skiers flock to a town in the Rockies in January and the restaurant business booms. What factor is affecting demand?
Market Size
Many US consumers have switched to wireless phones from traditional telephones. Which factor is affecting demand?
Substitution
Where there is a shift of the curve, what has taken place?
Price drops due to rise in the quantity
