ECON Chapter 4 QUIZ

Total revenue is defined as the amount of

• money a company receives by selling its goods.
• profit a company makes.
• profit a company makes after paying taxes.
• money affected by price elasticity.

Elastic demand comes from all of the following EXCEPT

•  immediate need of product.
• a limited budget that does not allow price changes.
• availability of substitute goods.
• the perception of the item as a luxury item.

What factor would NOT cause the demand curve to change?

• consumer tastes and advertising
• price
• income
• population

The substitution effect and the income effect

• allow economists to measure consumption.
• affect how consumers change their spending patterns.
• only apply to inferior goods.
• only apply to normal goods.

A drop in price will

• change the law of demand.
• increase the quantity demanded of goods.
• not affect the quantity demanded of goods.
• decrease the quantity demanded of goods

Which of the following describes the substitution effect?

• As demand falls, people will substitute other products.
• As the price of a good rises, people will substitute other products.
• As the price of a good falls, people will substitute other products.
• As demand rises, people will substitute other products.

Which of the following is determined by dividing the percentage change in quantity demanded by percentage change in price?

• income effect
• elasticity
• law of demand
• demand curve

If you keep buying despite a price increase, your demand is

• inelastic.
• normal.
• strong.
• elastic.

Substitutes are goods

• that cannot be replaced.
• used in place of one another.
• that are bought and used together.
• that cause a shift in the demand curve.

A measure of how consumers react to a change in price is known as the

• income effect.
• elasticity of demand.
• law of demand.
• demand curve.