1-33 Econ Test 2

Front 1

What is the basic principle of the law of demand ?

Back 1

When a goods price is lower, people will buy more of it

Front 2

True or False

The substitution effect takes place when a consumer reacts to a rise in the price of one good by consuming less of that good and more of a substitute

Back 2

True

Front 3

When prices rise, which of the following happens to income ?

Back 3

It buys less

Front 4

If prices rise and income stays the same, what is the effect on demand ?

Back 4

Fewer goods are bought

Front 5

What does it mean when an economist says that a consumer has demand for a good or service ?

Back 5

The consumer is willing and able to buy the a good or service at a specified price

Front 6

True it False

A demand schedule shows the quantities demanded at each price by all consumers in the market:

Back 6

True

Front 7

A demand curve slopes:

Back 7

Downward to the right

Front 8

What kind of table lists the quantity of a good that person will buy at different prices ?

Back 8

Individual demand schedule

Front 9

A shift in the demand curve means which of the following ?

Back 9

A change in demand in every price

Front 10

What causes a shift in demand ?

Back 10

A change in an area other than price

Front 11

What is the meaning of the phrase ceteris paribus to an economist ?

Back 11

An assumption that nothing but the price of an item with change

Front 12

A rise in income will result in demand for more:

Back 12

Normal Goods

Front 13

An inferior good is best described as:

Back 13

A good for which demand Falls when income Rises

Front 14

How can expectations about the future change consumer behavior ?

Back 14

Immediate demand for a good will go up if its price is expected to rise

Front 15

How can population changes affect demand for certain goods ?

Back 15

People at different stages of their lives have different demands

Front 16

A substitute good is best described as:

Back 16

A good used in a place of another good

Front 17

A complement is best described as:

Back 17

A good which is bought and used along with another good

Front 18

Elasticity of demand refers to:

Back 18

The measure of how consumers react to a change in price

Front 19

When you buy less of a good after a price change, your demand would be:

Back 19

Elastic

Front 20

Which of the following products would not have inelastic demand?

Back 20

Steak

Front 21

What effect does the average ability of many good substitutes have on the elasticity of demand for a good ?

Back 21

Demand would be elastic

Front 22

True or False

The larger the percentage of your income taken by purchases, the more elastic you will tend to be:

Back 22

True

Front 23

How does a person's perception of whether a good is a necessity or luxury affect his or her purchase of it ?

Back 23

A good that is perceived as a necessity will be purchased even if the price Rises

Front 24

For many consumers, steak is considered a luxury. Therefore, they can easily reduce the quantity they consume. Their demand would be:

Back 24

Elastic

Front 25

Parents will buy as much milk as their children need to stay healthy even if the price of milk were to rise from $2:49 to $5:49 a gallon. Their demand is:

Back 25

Inelastic

Front 26

True it False

When a consumer cannot respond to a price increase or find a substitute, their demand tends to be inelastic for the short-term:

Back 26

True

Front 27

How does elasticity affect a company's pricing policy ?

Back 27

If demand is elastic at the current price an increase in price would reduce total revenues

Front 28

How does the price range affect the elasticity of demand for a product ?

Back 28

Demand for a good can be inelastic at a low price but elastic at a high price

Front 29

When a good has elastic demand, total revenues will tend to:

Back 29

Drop as price is increased

Front 30

What is the principle of the law of supply ?

Back 30

The higher the price, the larger the quantity produced

Front 31

True or False:

A supply schedule shows the relationship between price and quantity supplied for a specific good:

Back 31

True

Front 32

True it False

Fixed costs are cost that rises or Falls depending on the quantity produced:

Back 32

False

Front 33

Fixed and variable costs added together are considered _________ costs:

Back 33

Total