social 12 (econ)- chapter 3

Question 1

the amount of a good or service that a consumer is willing and able to buy at various possible prices during a given time period

Answer 1

demand

Question 2

the amount of a good or service that a consumer is willing and able to buy at each particular price during a given time period

Answer 2

quantity demanded

Question 3

an increase in a goods price causes a decrease in the quantity demanded and that a decrease in price causes an increase in the quantity demand.

Answer 3

law of demand

Question 4

the amount of money, or income, that people have available to spend on goods and services

Answer 4

purchasing power

Question 5

any increase or decrease in consumers’ purchasing power caused by a change in price

Answer 5

income effect

Question 6

describes the tendency of consumers to substitute a similar, lower priced product for another product that is more expensive

Answer 6

substitution effect

Question 7

the natural decreases in the utility of a good or service as more units of it are consumed

Answer 7

diminishing marginal utility

Question 8

a table that shows the level of demand for a particular item at various prices

Answer 8

demand schedule

Question 9

a graphic representation of a demand schedule, showing the relationship between the price of an item and the quantity demanded during a given period, with all other things being equal.

Answer 9

demand curve

Question 10

a nonprice factor that influences the amount of demand for a good or service.

Answer 10

determinants of demand

Question 11

goods that can be used to replace the purchase of similar goods when prices rise

Answer 11

substitute goods

Question 12

goods that are commonly used with other goods

Answer 12

complementary goods

Question 13

the degree to which changes in a good’s price affect the quantity demanded by consumers

Answer 13

elasticity of demand

Question 14

exists when a small change in a good’s price causes a major opposite change in the quantity demanded (drop)

Answer 14

elastic demand

Question 15

exists when a change in a good’s price has little impact on the quantity demanded (increase)

Answer 15

inelastic demand

Question 16

refers to the total income that a business receives from selling its products

Answer 16

total revenue

Question 17

five causes that cause shift in demand:

Answer 17

1. consumer tastes and preferences
2. market size
3. income
4. prices of related goods
5. consumer expectations

Question 18

markets expand and contract for what three reasons?

Answer 18

1. decisions made by businesses
2. decisions made by government
3. technology

Question 19

what are the three reasons why the elasticity of a good can change?

Answer 19

1. the product is not a necessity
2. there are readily available substitutes
3. the product’s cost represents a large portion of consumers income

Question 20

what are the three reasons why a good has inelastic demand?

Answer 20

1. the product is a necessity
2. there are few or no readily available substitutes
3. the product’s cost represents a small portion of consumers’ income