Economics test 3 Supply and Demand

Question 1

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

Answer 1

supply and demand

Question 2

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

Answer 2

Demand

Question 3

What is one of the major factors that influence demand?

Answer 3

Price

Question 4

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

Answer 4

law of demand

Question 5

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

Answer 5

buy less of it

Question 6

What kind of relationship does Quantity demanded and price have?

Answer 6

and inverse relationship

Question 7

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?

Answer 7

a demand schedule

Question 8

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

Answer 8

a market demand schedule

Question 9

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

Answer 9

prices

Question 10

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

Answer 10

quantity demanded

Question 11

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

Answer 11

a demand curve

Question 12

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

Answer 12

left to right

Question 13

What shows the data found in the market demand schedule?

Answer 13

A market demand curve

Question 14

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

Answer 14

a market demand curve

Question 15

_____ displays prices and _____ displays quantities demanded?

Answer 15

the vertical axis

horizontal axis

Question 16

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

Answer 16

the law of diminishing marginal utility

Question 17

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

Answer 17

utility

Question 18

Economists have identified 2 patterns of behavior as causes:

Answer 18

• the income effect

- the substitution effect

Question 19

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?

Answer 19

income effect (a penny saved is a penny earned)

Question 20

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?

Answer 20

The substitution effect

Question 21

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

Answer 21

quantity demanded

Question 22

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

Answer 22

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

Question 23

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

Answer 23

change in demand

Question 24

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

Answer 24

• income
• market size
• consumer taxes
• consumer expectations
• substitute goods
• complementary goods

Question 25

Changes in income also affect what?

Answer 25

market demand curves

Question 26

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

Answer 26

usually rises or falls

Question 27

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

Answer 27

normal goods

Question 28

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

Answer 28

inferior goods

Question 29

What are used books and generic food products?

Answer 29

inferior goods

Question 30

What has a strong influence on consumer taste?

Answer 30

advertising

Question 31

What can effect your buying habits today?

Answer 31

your expectation for the future

Question 32

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

Answer 32

substitutes

Question 33

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

Answer 33

increases | decreases

Question 34

What can be used in place of another?

Answer 34

substitutes

Question 35

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

Answer 35

complements

Question 36

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

Answer 36

complements

Question 37

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

Answer 37

elastic category

Question 38

Why is insulin inelastic?

Answer 38

the quantity demanded remains relatively constant

Question 39

No good or service is ever really _____ _______.

Answer 39

unit elastic

Question 40

What 3 things determine elasticity?

Answer 40

- substitute goods or services - proportion of income - necessities vs luxuries

Question 41

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

Answer 41

inelastic

Question 42

What is another factor that affects elasticity?

Answer 42

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

Question 43

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

Answer 43

inelastic

Question 44

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

Answer 44

necessity

Question 45

Are necessities elastic or inelastic?

Answer 45

inelastic

Question 46

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

Answer 46

inelastic

Question 47

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

Answer 47

luxury

Question 48

Demand for luxuries tend to be _____.

Answer 48

elastic

Question 49

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

Answer 49

inelastic | elastic

Question 50

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

Answer 50

unit elastic

Question 51

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

Answer 51

elasticity of demand

Question 52

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

Answer 52

1

Question 53

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

Answer 53

elastic

Question 54

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

Answer 54

Inelastic

Question 55

Elastic goods and services are often said to be _______.

Answer 55

price sensitive

Question 56

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

Answer 56

inelastic demand