Transcript A. increase the demand for goods.

Demand Review
Economics
Mr. Bordelon
Multiple Choice
1. The law of demand says
A. the higher the price, the more consumers will buy.
B. the lower the price, the less consumers will buy.
C. the lower the price, the more consumers will buy.
D. the lower the price, the more consumers will substitute.
Multiple Choice
1. The law of demand says
A. the higher the price, the more consumers will buy.
B. the lower the price, the less consumers will buy.
C. the lower the price, the more consumers will buy.
D. the lower the price, the more consumers will substitute.
Multiple Choice
2. A drop in price will
A. increase the demand for goods.
B. decrease the demand for goods.
C. not affect the demand for goods.
D. not affect the law of demand.
Multiple Choice
2. A drop in price will
A. increase the demand for goods.
B. decrease the demand for goods.
C. not affect the demand for goods.
D. not affect the law of demand.
Multiple Choice
3. Which of the following describes the substitution effect?
A. As the price of a good falls, people will substitute other
products.
B. As the price of a good rises, people will substitute other
products.
C. As demand rises, people will substitute other products.
D. As demand falls, people will substitute other products.
Multiple Choice
3. Which of the following describes the substitution effect?
A. As the price of a good falls, people will substitute other
products.
B. As the price of a good rises, people will substitute
other products.
C. As demand rises, people will substitute other products.
D. As demand falls, people will substitute other products.
Multiple Choice
4. A demand curve illustrates
A. the differences in price charged by different stores.
B. the quantities demanded at each price by consumers.
C. the differences in demand for different products.
D. the products which are most in demand.
Multiple Choice
4. A demand curve illustrates
A. the differences in price charged by different stores.
B. the quantities demanded at each price by
consumers.
C. the differences in demand for different products.
D. the products which are most in demand.
Multiple Choice
5. For most goods, a rise in people’s income means that there
will be
A. a substitution effect.
B. a rise in prices.
C. an increase in demand.
D. a decrease in demand.
Multiple Choice
5. For most goods, a rise in people’s income means that there
will be
A. a substitution effect.
B. a rise in prices.
C. an increase in demand.
D. a decrease in demand.
Multiple Choice
6. Which of the following is NOT an example of complements?
A. skis and ski boots
B. row boat and oars
C. electric shaver and charging cord
D. calculator and cell phone
Multiple Choice
6. Which of the following is NOT an example of complements?
A. skis and ski boots
B. row boat and oars
C. electric shaver and charging cord
D. calculator and cell phone
Multiple Choice
7. Substitutes are
A. goods that are bought and used together.
B. goods used in place of one another.
C. goods that cannot be replaced.
D. goods which cause a shift in the demand curve.
Multiple Choice
7. Substitutes are
A. goods that are bought and used together.
B. goods used in place of one another.
C. goods that cannot be replaced.
D. goods which cause a shift in the demand curve.
Multiple Choice
8. If you keep buying despite a price increase, your demand is
A. elastic.
B. strong.
C. normal.
D. inelastic.
Multiple Choice
8. If you keep buying despite a price increase, your demand is
A. elastic.
B. strong.
C. normal.
D. inelastic.
Multiple Choice
9. Which of the following is an example of a good with inelastic
demand?
A. life-saving medicine
B. television sets
C. computers
D. a particular brand of chewing gum
Multiple Choice
9. Which of the following is an example of a good with inelastic
demand?
A. life-saving medicine
B. television sets
C. computers
D. a particular brand of chewing gum
Multiple Choice
10. Total revenue is defined as
A. the amount of profit a company makes.
B. the amount of profit a company makes after paying taxes.
C. the amount of money a company makes by selling its
goods.
D. the amount of money affected by price elasticity.
Multiple Choice
10. Total revenue is defined as
A. the amount of profit a company makes.
B. the amount of profit a company makes after paying taxes.
C. the amount of money a company makes by selling
its goods.
D. the amount of money affected by price elasticity.
Key Terms
 You would refer to a(n) _____ to find the quantity that a
person would purchase at each price that could be offered in
a market.
Key Terms
 You would refer to a demand curve to find the quantity that a
person would purchase at each price that could be offered in
a market.
Key Terms
 For a(n) _____, a consumer’s demand will increase as his or
her income increases.
Key Terms
 For a normal good, a consumer’s demand will increase as his
or her income increases.
Key Terms
 The _____ occurs when an increase in price decreases a
consumer’s real income.
Key Terms
 The income effect occurs when an increase in price decreases
a consumer’s real income.
Key Terms
 Demand for goods that are necessities is usually _____.
Key Terms
 Demand for goods that are necessities is usually inelastic.
Key Terms
 If the elasticity of demand of a good is equal to 1, it is
described as _____.
Key Terms
 If the elasticity of demand of a good is equal to 1, it is
described as unitary elastic.
Key Terms
 According to the _____, when prices increase, demand will
decrease.
Key Terms
 According to the law of demand, when prices increase,
demand will decrease.
Key Terms
 Two goods that are bought and used together are _____.
Key Terms
 Two goods that are bought and used together are
complements.
Key Terms
 Inferior goods
 Law of demand
 Elastic
 Elasticity of demand
Main Ideas
 Describe the substitution effect in your own words, and give
one example.
Main Ideas
 The substitution effect occurs when a consumer reacts to a
rise in the price of one good by consuming less of that good
and more of a cheaper substitute. An example is using the
generic brand of a good when the name brand version goes
up in price.
Main Idea
 List and describe three causes for shifts in the demand curve.
Main Ideas
 Change in income
 Change in consumer expecations
 Change in population
 Change in consumer tastes and advertising
Main Ideas
 What are four factors that affect elasticity?
Main Ideas
 Availability of substitutes
 Relative importance
 Necessity v. Luxury
 Price change over time
Questions
 Will there always be a demand for inferior goods? How
could demand for an inferior good decrease?
 Agree or disagree: An increase in income will shift the
demand curve for a normal good to the left.
Demand Schedule
 How many urban residents
Demand Schedule
Servi
ce
Urban
Rural
10 $20 $30 $10 $20 $30
Lawn 15
8
2
82
71
42
Taxi
84
78
37
10
8
1
Hair
92
61
18
88
57
19
would take a taxi that costs
$20?
 Which service has equally
low demand in both regions
at $30?
 Compare taxi rides. What
reason could there be for
such different demands in
different areas?
 Which service has inelastic
demand in both areas?