Chapter 4 Study Guide

Question 1

For most products and services, increased price results in _____

Answer 1

Demand for fewer products

Question 2

An increase in the price of milk causes a decrease in the demand for cereal. The two products are _____

Answer 2

Complements

Question 3

Advertising, fashion trends, and new product introductions serve to _____

Answer 3

Create consumer demand

Question 4

Because a modest price increase has little to no effect, the demand for the product is _____

Answer 4

Inelastic

Question 5

When a business doubled the price of a product in order to increase profits, then a dramatic decline in revenues demonstrated the _____ of the product

Answer 5

Elasticity

Question 6

A demand schedule shows _____

Answer 6

A listing of the various quantities demanded of a particular product at all prices that mights prevail in the market

Question 7

Consumers’ willingness to replace a costly item with a less costly item is an example of _____

Answer 7

The Substitution Effect

Question 8

An increase in the price of cameras results in a decrease in the demand of film. The two products are _____

Answer 8

Complements

Question 9

When a customer’s need for a product is not urgent, demand tends to be _____

Answer 9

Elastic

Question 10

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 _____

Answer 10

Unit Elastic

Question 11

_____ is the desire, ability, and willingness to buy a product

Answer 11

Demand

Question 12

_____ is the extra usefulness gained from using one more unit of a product

Answer 12

Marginal Utility

Question 13

_____ is the listing that shows quantities demanded of a product at all prices

Answer 13

Demand Schedule

Question 14

_____ is the measure of responsiveness that show show a dependent variable responds to a change in an independent variable

Answer 14

Elasticity

Question 15

_____ are products used in place of other products

Answer 15

Substitutes

Question 16

_____ describes change in demand when a change in price causes a relatively larger change in quantity demanded

Answer 16

Elastic

Question 17

_____ is a field of economics that deals with behavior and decision making by small units

Answer 17

Microeconomics

Question 18

_____ is the given change in price that causes a proportional change in quantity demanded

Answer 18

Unit Elastic

Question 19

_____ is the movement along the demand curve

Answer 19

Change in Quantity Demanded

Question 20

_____ is the change in quantity demanded due to a relative change in price

Answer 20

Substitution Effect

Question 21

_____ is the graph showing the quantity demanded at every price

Answer 21

Demand Curve

Question 22

_____ is the willingness to buy more or less of a product at the same price

Answer 22

Change in Demand

Question 23

_____ is when the quantity demanded of a product varies inversely with its price

Answer 23

Law of Demand

Question 24

_____ are products where the use of one product increases with the other

Answer 24

Complements

Question 25

_____ illustrates the demand of everyone interested in purchasing a product

Answer 25

Market Demand Curve

Question 26

_____ is the extent to which a change in price causes a change in demand

Answer 26

Demand Elasticity

Question 27

_____ is the study of economic behavior of individuals and firms

Answer 27

Microeconomics

Question 28

_____ describes a given change in price that causes a relatively smaller change in quantity demanded

Answer 28

Inelastic

Question 29

_____ is the decline in extra satisfaction from using additional quantities of a product

Answer 29

Diminishing Marginal Utility

Question 30

_____ is the change in quantity demanded because a price change altered consumer’s real income

Answer 30

Income Effect