Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | elasticity of demand | f. | total revenue | b. | substitution
effect | g. | normal
good | c. | law of demand | h. | inferior good | d. | complement | i. | demand curve | e. | substitute | j. | ceteris paribus |
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1.
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a graphic representation of a demand schedule
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2.
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a good that replaces another demanded good
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3.
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a good that consumers will demand more of when their incomes increase
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4.
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a good that is always used with another good
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5.
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the amount of money a company receives by selling goods or services
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6.
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what happens when consumers react to an increase in a good’s price by
consuming less of that good and more of other goods
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7.
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a measure of how people change their buying patterns when prices change
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8.
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the way that a change in price determines whether or not consumers buy
goods
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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9.
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When a consumer is able and willing to buy a good or service, he or she creates
which of the following?
a. | consumption | c. | elasticity | b. | demand | d. | allocation |
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10.
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What determines the price and the quantity produced of most goods?
a. | the consumer’s perception of necessity | b. | the interaction of
supply and demand | c. | the availability of substitutes for the
goods | d. | the quality of the goods that are produced |
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11.
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What are inferior goods?
a. | goods that are not well produced | b. | goods that no one wants to
buy | c. | goods for which the demand rises when income falls | d. | goods for which the
demand falls when income rises |
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12.
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How is future price related to current demand?
a. | If the price is expected to rise, current demand will drop. | b. | If the price is
expected to fall, current demand will rise. | c. | If the price is expected to rise, current
demand will rise. | d. | Future price is not related to current
demand. |
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13.
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What determines how a change in prices will affect total revenue for a
company?
a. | elasticity of demand | c. | values of elasticity | b. | the company’s pricing
policy | d. | the consumers’
incomes |
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14.
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What kind of system is the United States economy based on?
a. | cause and effect | c. | market | b. | centralized | d. | production |
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15.
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Ceteris paribus, or “all other things held constant,” is an
assumption that has which of the following effects on a demand schedule?
a. | It takes only prices into account. | b. | It considers the effects of all possible
changes on demand. | c. | It is accurate no matter what changes
occur. | d. | It is accurate only at one price level. |
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16.
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What shows the quantities of products demanded at each price by all consumers in
a market?
a. | an elasticity and consumption list | c. | a market pricing
list | b. | a schedule of consumer prices | d. | a market demand
schedule |
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17.
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How did the existence of the baby boom generation change demand in the United
States?
a. | Demand was raised for different goods with each age the baby boomers
reached. | b. | After they reached the teenage years, the baby boomers were integrated into the
society and no longer affected demand. | c. | People were poorer because they had so many
children, so demand was lowered. | d. | The baby boomers did not raise demand until
they became adults, when they had their own money to spend. |
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18.
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What does it mean when the demand for a product is inelastic?
a. | People will not buy any of the product when the price goes up. | b. | A price increase
does not have a significant impact on buying habits. | c. | Customers are sensitive to the price of the
product. | d. | There are very few satisfactory substitutes for the
product. |
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Short Answer
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Reading a Market Demand Schedule| | Number of Teens | Number of Adults | | Product | $1 | $2 | $3 | $1 | $2 | $3 | | Magazine | 20 | 15 | 5 | 50 | 35 | 20 | | Candy Bar | 50 | 25 | 5 | 50 | 40 | 20 | | Video Game | 50 | 40 | 10 | 15 | 10 | 5 | | | | | | | | |
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19.
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How many teenagers would buy a candy bar for $2?
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20.
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Which product is least appealing to adults at any price?
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21.
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Is the elasticity of demand for any of the products, at any of the prices,
unitary?
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Essay
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Critical Thinking
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22.
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Give an example of how a consumer’s expectation that price will go down in
the future can affect his or her desire to buy something today. Does this always have the same effect
on present buying patterns?
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23.
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How does the budget percentage that a person spends on a certain good affect the
elasticity of demand for that good? Give a specific example.
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24.
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How can a change in population cause a change in the type of clothing that is in
demand?
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