Test

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 influences demand?

Answer 3

Price

Question 4

As the price of a good or service __________, consumers usually buy less of it

Answer 4

Increase

Question 5

Quantity demanded and price have an ___________________

Answer 5

Inverse Relationship

Question 6

A __________________ is a table that shows how much of a good or service all consumers are willing and able to buy each price in a market

Answer 6

Demand schedule

Question 7

The left-hand column of the table lists:

Answer 7

Various prices of a good or service

Question 8

The right-hand column shows

Answer 8

the quantity demanded of the good/service at each price

Question 9

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

Answer 9

Demand curve

Question 10

The demand curve should slope:

Answer 10

downward from the upper left to lower right

Question 11

shows the data found in the market demand schedule and shows the sum of the information on the individual demand curves of all consumers in a market

Answer 11

Market demand curve

Question 12

The vertical axis displays:

Answer 12

Prices

Question 13

The horizontal axis displays:

Answer 13

Quantities demanded

Question 14

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

Answer 14

The law of diminishing marginal utility

Question 15

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

Answer 15

Utility

Question 16

Economists have identified two patterns of behavior as causes:

Answer 16

Income effect and Substitution effect

Question 17

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 17

Income effect

Question 18

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

Answer 18

Substitution effect

Question 19

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

Answer 19

Change in quantity demanded

Question 20

Movement along the demand curve is caused by

Answer 20

change in price

Question 21

Changes in income also affect:

Answer 21

market demand curves

Question 22

are goods that consumers demand more of when their incomes rise

Answer 22

Normal goods

Question 23

are goods that consumers demand less of when their incomes rise

Answer 23

Inferior goods

Question 24

has a strong influence on consumer tastes

Answer 24

Advertising

Question 25

Goods and services that can be used in place of other goods and services to satisfy consumer wants are called:

Answer 25

Substitutes

Question 26

Demand for the substitute will _________ while the demand for the original item __________

Answer 26

increases; decreases

Question 27

When the use of one product increases the use of another product, the two products are called

Answer 27

complements

Question 28

Economists use the term ________________ to describe how responsive consumers are to price changes in the marketplace

Answer 28

elasticity of demand

Question 29

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

Answer 29

Elastic

Question 30

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

Answer 30

inelastic

Question 31

Elastic goods and services are often said to be:

Answer 31

price sensitive

Question 32

In the case of _____________ changes in price have little impact on the quantity demanded

Answer 32

Inelastic demand

Question 33

Goods that have a larger number of substitutes fall into the

Answer 33

elastics

Question 34

The _______________ has a steeper slope than the ______________ does

Answer 34

inelastic demand curve; elastic demand curve

Question 35

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

Answer 35

unit elastic

Question 36

Three things determine elasticity:

Answer 36

Substitute goods or services
Proportion of income
Necessities vs Luxuries

Question 37

If there are no substitutes for a good or services, demand for it tends to be

Answer 37

inelastic

Question 38

is another factor that affects elasticity

Answer 38

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

Question 39

is something you must have, such as food or water

Answer 39

necessity

Question 40

is something that you desire but that is not essential to your life, such as a plasma television

Answer 40

luxury

Question 41

Six factors can cause a change in demand:

Answer 41

income, market size, consumer tastes, consumer expectations, substitute goods, and complementary goods

Question 42

Demand for luxuries tends to be

Answer 42

elastic