Module 2 - Demand

Question 1

A ___ is any place where buyers and sellers interact to trade goods, services, or resources.

Answer 1

Market

Question 2

A ___ is a tangible product or action that consumers, firms, or governments wish to purchase.

Answer 2

Good

Question 3

A ___ is an intangible product or action that consumers, firms or governments wish to purchase.

Answer 3

Service

Question 4

A ___ is any item, whether it’s a gift of nature, the result of production, or the result of human effort, that is used to produce goods and services.

Answer 4

Resource

Question 5

The ___ is a principle that states: as the price of a good, service or resource rises, the quantity demanded will fall, and vice versa (if all else remains constant).

Answer 5

Law of Demand

Question 6

___ is a table representation of the relationship between the price of a good, service, or resource and the quantities consumers are willing and able to buy over a fixed period of time (if all else remains constant).

Answer 6

Demand schedule

Question 7

___ is a graph representation of the relationship between the price of a good, service or resource and the quantities consumers are willing and able to buy over a fixed period (if all else remains constant).

Answer 7

Demand curve

Question 8

___ is the quantity demanded of a good, service or resource that consumers are willing and able to buy at a given price.

Answer 8

Quantity demanded
↑ price ↓ quantity demanded
↓ price ↑ quantity demanded

Question 9

What are the three reasons why demand curves are downward sloping?

Answer 9

1. Income effect
2. Substitution effect
3. Diminishing marginal utility

Question 10

___ is the effect that a change in the price of a good, service or resource has on the purchasing power of income.
I.e., You plan to purchase jeans for $25, but jeans are $10 each, so you purchase 2.

Answer 10

Income effect
↑ price ↓ purchasing power of income
↓ price ↑ purchasing power of income

Question 11

___ is the effect that a change in price of one good, service, or resource has on the demand for another.
I.e., The cost of flying vs the cost of driving.

Answer 11

Substitution effect
↑ price ↑ demand for substitute
↓ price ↓ demand for substitute

Question 12

___ is the negative relationship between the quantity of a good, service, or resource and the marginal utility obtained from each additional unit consumed in a given period of time.
I.e., You purchase 2 cups of coffee; the first for $3 and the second for $1. If the price increases to $2 a cup, you only purchase the first cup because the second cup is only worth $1 to you.

Answer 12

Diminishing marginal utility; or benefit

Question 13

___ is the summation of the individual demand curves.

Answer 13

Market demand

Question 14

A ___ is the change in quantity of a good, service, or resource demanded at every price.

Answer 14

Shift in demand
↑ demand - R shift
↓ demand - L shift

Question 15

___ is a change in the quantity of a good, service, or resource demanded due to a change in its price.
I.e., Bottled water at the beach on a hot day vs on a rainy day.

Answer 15

Movement along a demand curve
↑ demand - R shift
↓ demand - L shift

Question 16

A ___ is a good for which there is a direct relationship between the demand for the good and current income.
I.e., Ability of buying shoes, clothes, etc with current income.

Answer 16

Normal good
↑ income ↑ demand - R shift
↓ income ↓ demand - L shift

Question 17

An ___ is a good for which there is an inverse relationship between the demand for good and income.

Answer 17

Inferior good
↑ income ↓ demand - L shift
↓ income ↑ demand - R shift

Question 18

___ are the perception of the desirability associated with consuming a good, service, or resource.

Answer 18

Tastes and preferences

Question 19

___ are market participants who seek to obtain goods, services, or resources.

Answer 19

Buyers

Question 20

___ is the anticipation by individuals and firms of costs and benefits that lie in the future.

Answer 20

Expectations

Question 21

What are nonprice determinants of demand?

Answer 21

1. Tastes and preferences
2. Number of buyers
3. Expectations

Question 22

___ are goods, services and resources viewed as replacements for another.
I.e., Pesi vs Coca Cola

Answer 22

Substitutions
↑ price of preferred good ↑ demand for substitution
↓ price of preferred good ↓ demand for substitution

Question 23

___ are goods, services, and resources usually consumed with one another.
I.e., Chips and salsa, PBJ

Answer 23

Complements
↑ price of good ↓ demand for complementary good
↓ price of good ↑ demand for complementary good

Question 24

The change in quantity of a good, service or resource that consumers, firms and governments are willing and able to buy due to a change in it’s price is called ___.

Answer 24

Change in quantity demanded

Question 25

___ is the point in the demand curve at a particular price.

Answer 25

Quantity demanded