Chapter 4: Demand
- 1.Why does a market demand curve show larger quantities than an individual demand curve?
- A.
A market demand curve shows the quantities demanded by all consumers, and an individual demand curve shows the quantities demanded by one consumer.
- B.
A market demand curve is based on a market demand schedule whereas an individual demand curve is based on the demand schedules of selected customers.
- C.
A market demand curve tracks many products, but an individual demand curve tracks only one product
- D.
A market demand curve gives data for all the stores in a region, but an individual demand curve gives data for only one store.
- 2.The law of demand states that
- A.
Producers demand the highest possible price for their product and consumers demand the lowest possible price.
- B.
Producers provide only the goods and services for which there is a real consumer demand.
- C.
Only consumers who are willing and able to pay have an actual demand for a product.
- D.
When prices go down, quantity demanded increases; when prices go up, quantity demanded decreases.
- 3.A market demand schedule shows
- A.
How many units of a product individual customers buy on a regular basis.
- B.
How much of a good or service all consumers are willing and able to buy at each price.
- C.
The cost of products and the number of units sold.
- D.
It shows how to calculate the best price to charge for a product.
- 4.Which of the following is an example of demand?
- A.
You are calculating how much a week-long backpacking trip would cost.
- B.
You have saved $150.00 and want to buy new shoes and accessories for the prom.
- C.
You have money for a birthday gift for a friend but can't decide what to buy.
- D.
You need a white shirt for work but only have $5.00 on hand.
- 5.What is the substitution effect?
- A.
The increased benefit consumers get from using different brands of the same product rather than being loyal to one
- B.
The reduced satisfaction consumers get from using a second or third unit of a product
- C.
A switch to more expensive, higher quality products when income increases
- D.
A change in the amount of a product consumers buy because they buy other similar goods
- 6.A change in quantity demanded is
- A.
A change in the amount of a product consumers will buy because of a change in price.
- B.
A shift in the demand curve vertically or horizontally.
- C.
A change in market situations that leads to a change in availability.
- D.
A change in how much individuals will buy when the price remains the same.
- 7.Three factors that can cause a change in demand are
- A.
Market size, consumer tastes, and advertising.
- B.
Consumer expectations, marginal utility, and substitutes.
- C.
Income, consumer tastes, and complements.
- D.
Income, substitutes, and advertising.
- 8.What happens when the income of consumers rises?
- A.
The market size increases.
- B.
The demand for quality products decreases.
- C.
Consumers tend to buy more discounted and generic products.
- D.
Consumers usually demand more normal goods.
- 9.Consumers' expectations about the price of a good or service will often
- A.
Influence whether a product becomes popular or not.
- B.
Influences consumers to buy substitute products.
- C.
Determine whether consumers buy products now or later.
- D.
Affect the demand for the product's complements.
- 10.Demand for a product is inelastic when
- A.
The price rises compared to the price of substitutes.
- B.
The quantity demanded changes little as the price changes.
- C.
The product is price sensitive.
- D.
A change in price leads to a large change in the quantity demanded.
- 11.The availability of substitutes
- A.
Produces a demand curve with a steeper slope.
- B.
Makes a product unit elastic.
- C.
Makes the demand for a product more elastic.
- D.
Leads more consumers to purchase a product.
- 12.When the price of a good or service goes up, your demand will probably
- A.
Fall if the cost consumes a large proportion of your income.
- B.
Be inelastic if the cost consumes a large proportion of your income.
- C.
Increase if the product is inexpensive.
- D.
Increase if your income also increases.
- 13.The demand for necessities
- A.
Varies according to price.
- B.
Remains the same no matter what the price.
- C.
Tends to be inelastic.
- D.
Is not affected by available substitutes.
- 14.Economists measure elasticity of demand by
- A.
Compiling a seller's market demand schedule.
- B.
Plotting shifts in demand.
- C.
Calculating diminishing marginal utility.
- D.
Calculating a seller's total revenue.
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