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U.S. Government > Economics test 3 Supply and Demand > Flashcards

Economics test 3 Supply and Demand Flashcards

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1
Q

The forces of __________ establish the price that best serves both producers and consumers.

A

supply and demand

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2
Q

What is the desire to have a good or service and the ability to pay for it?

A

Demand

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3
Q

What is one of the major factors that influence demand?

A

Price

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4
Q

What states that when the price of a good or service falls, consumers will buy more of it?

A

law of demand

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5
Q

As the price of a good or service increase, consumers usually _________?

A

buy less of it

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6
Q

What kind of relationship does Quantity demanded and price have?

A

and inverse relationship

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7
Q

What is a table that shows how much of a good or service an individual consumer willing and able to purchase at each price in the market?

A

a demand schedule

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8
Q

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

A

a market demand schedule

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9
Q

The left handed column of the table lists various _______ of good/services

A

prices

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10
Q

The right handed column shows the _________ _______ of the good/service at each price

A

quantity demanded

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11
Q

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

A

a demand curve

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12
Q

The demand curve should slope downward from the upper _______ to lower _______.

A

left to right

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13
Q

What shows the data found in the market demand schedule?

A

A market demand curve

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14
Q

What shows the sum of the information on the individual demand curves of all consumers in a market?

A

a market demand curve

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15
Q

_____ displays prices and _____ displays quantities demanded?

A

the vertical axis

horizontal axis

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16
Q

What states that the marginal benefit of using each additional unit of a product during a given period will decline?

A

the law of diminishing marginal utility

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17
Q

_____ is the satisfaction gained from the use of a good or service.

A

utility

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18
Q

Economists have identified 2 patterns of behavior as causes:

A
  • the income effect

- the substitution effect

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19
Q

What is the term used for a change in the amount of a product that a consumer will buy because purchasing power of his/her income changes?

A

income effect (a penny saved is a penny earned)

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20
Q

What is the effect of behavior that occurs when consumers react to a change in the price of a good or service by buying a substitute product?

A

The substitution effect

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21
Q

A change in the amount of a product that consumers will buy because of a change in price is called a change in the ________ _________.

A

quantity demanded

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22
Q

Each change in quantity demanded is shown by a ____ ____ on the demand curve.

A 
new point 
(if price is mentioned, it is not a shift)
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23
Q

What is called a shift in demand because it actually shifts the position of the demand curve?

A

change in demand

24
Q

What are the 6 factors that can cause a change in demand?

A
  • income
  • market size
  • consumer taxes
  • consumer expectations
  • substitute goods
  • complementary goods
25
Q

Changes in income also affect what?

A

market demand curves

26
Q

When the incomes of most consumers in a market rise or fall, the total demand in that market also _________.

A

usually rises or falls

27
Q

What are goods that consumers demand more of when their incomes rise?

A

normal goods

28
Q

What are goods that consumers demand less of when their incomes rise?

A

inferior goods

29
Q

What are used books and generic food products?

A

inferior goods

30
Q

What has a strong influence on consumer taste?

A

advertising

31
Q

What can effect your buying habits today?

A

your expectation for the future

32
Q

What are goods and services that can be used in place of other goods and services to satisfy consumer wants?

A

substitutes

33
Q

Demand for the substitute will _______ while demand for the original item _______

A

increases

decreases

34
Q

What can be used in place of another?

A

substitutes

35
Q

When the use of a product increases the use of another product, the two products are called ________.

A

complements

36
Q

In contrast to substitutes, ________ are goods or services that work in tandem with each other

A

complements

37
Q

Goods that have a larger number of substitutes fall into what kind of category?

A

elastic category

38
Q

Why is insulin inelastic?

A

the quantity demanded remains relatively constant

39
Q

No good or service is ever really _____ _______.

A

unit elastic

40
Q

What 3 things determine elasticity?

A
  • substitute goods or services
  • proportion of income
  • necessities vs luxuries
41
Q

If there are no substitutes for a good or service, demand for it tends to be ______.

A

inelastic

42
Q

What is another factor that affects elasticity?

A

percentage of your income that you spend on a good or service

43
Q

Demand products that cost little of your income tends to be _______.

A

inelastic

44
Q

What is something you must have, like food or water?

A

necessity

45
Q

Are necessities elastic or inelastic?

A

inelastic

46
Q

the change in quantity demanded is smaller than the change in price, so demand is ______.

A

inelastic

47
Q

A _______ is something that you desire but that is not essential to your life, such as a plasma tv.

A

luxury

48
Q

Demand for luxuries tend to be _____.

A

elastic

49
Q

The ________ demand curve has a steeper slope than the ______ demand curve does.

A

inelastic

elastic

50
Q

Demand is said to be a ______ _______ when the percentage change in price and quantity demanded are the same

A

unit elastic

51
Q

Economics use the term ______ to describe how responsive consumers are to price changes in the marketplace.

A

elasticity of demand

52
Q

For something to be elastic, the number will be greater than ____.

A

1

53
Q

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

A

elastic

54
Q

Demand is _______ when a change in price leads to a relatively smaller change in the quantity demanded.

A

Inelastic

55
Q

Elastic goods and services are often said to be _______.

A

price sensitive

56
Q

In the case of ________, changes in price have little impact on the quantity demanded.

A

inelastic demand

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