Economics Chapter 4 Section Quiz – Flashcards
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The _________________ shows the quantities demanded by everyone who is interested in purchasing a product at all possible prices
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market demand curve
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When the price of something increases, the quantity demanded
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decreases
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Consider the term marginal utility. Which word is the best synonym for marginal?
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additional
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Why is the Law of Demand called a "law"?
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Because it has been demonstrated repeatedly
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The Law of Demand states that the quantity demanded of a product varies _______ with its price.
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inversely
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A demand schedule is best described as __________.
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a graph.
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As people use more and more of a product, they encounter _______________.
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diminishing marginal utility.
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Why is a demand curve downward sloping?
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Because diminishing marginal utility affects quantity of purchase
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(T/F) Prices act as a motivating influence, or incentive, that causes an individual to take action.
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True
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The desire, ability, and willingness to buy a product or service is called
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demand
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Products related in such a way that an increase in the price of one increases the demand for the other are called
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substitutes
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Movement along the demand curve showing that a different quantity is purchased in response to a change in price is called
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a change in quantity demanded.
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Products related in such a way that an increase in the price of one reduces the demand for both are called
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complements
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Consumer demand for different amounts at every price, causing the demand curve to shift to the left or the right is called
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a change in demand.
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Which is a likely complement to a tablet computer?
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Apps
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A change in quantity demanded is represented by __________.
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movement along the demand curve.
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What is the main cause of a change in quantity demanded?
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price
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What is the relationship between income and demand?
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An increase in income increases demand.
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The portion of a change in quantity demanded caused by a change in a consumer's income when the price of a product changes is called
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the income effect.
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Which of the following is most closely related to relative prices?
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the substitution effect
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(T/F) Demand is unit elastic when a given change in prices causes a proportional change in quantity demanded.
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True
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An economist performs a total expenditures test and finds that a change in price and a change in revenue move in opposite directions and concludes that the test shows __________.
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demand is elastic.
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To determine elasticity, which question would an economist ask?
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What portion of the consumers's income is required for the purchase?
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Which term refers to the idea that price causes a proportional change in quantity demanded?
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unit elastic.
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(T/F) To estimate elasticity, add the direction of a price change to the direction of the change in total revenue, or total expenditures.
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False
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Demand elasticity is the extent to which a change in price causes a change in the quantity demanded.
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True
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Prices for common vegetables tend to be elastic. Why?
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because other vegetables are available.
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(T/F) The sole determinant of elasticity is the answer to this question: Can the purchase be delayed?
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False
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(T/F) Demand is elastic when a given change in price causes a relatively smaller change in quantity demanded.
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False
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For which product is demand likely to be the most elastic?
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a product with many adequate substitutes
