Fundamentals and Elasticity of Demand

What is demand?

• The desire to own something and the ability to afford it.

• A graph that shows the quantity demanded at every price.

• The usefulness of a product expressed in a dollar sign.

Which of the following best describes the Law of Demand?

• As price goes down, demand goes down. (and vice versa).

• As price goes down, demand goes up (and vice versa).

• As demand goes down, supply goes up.

• As demand goes up, price becomes elastic.

The Law of Demand "works" because of a combination of what two effects?

• Substitution and Income Effects

• Doppler and Lake Effects

• The Ability and Desire Effect

• The Substitution and Elasticity Effect

Consuming more of one good because of a change in price of another good is known as the 

• income effect

• substitution effect

• elasticity effect

• demand effect

This occurs when you feel like you have less money when the price of a good rises.

• Income Effect

• Substitution Effect

• Demand Effect

• Inflation Effect

A table that lists the quantity of a good that a single person will buy at each price in a market.

• demand schedule

• market demand schedule

• elasticity chart

• supply and demand graph

The demand for a good is _____ when a small change in price causes a large change in the quantity demanded.

• elastic

• inelastic

• related

• substituted

If a consumer knows that a product will be going on sale this week, how will his/her CURRENT demand be affected?

• it will go up

• it will go down

• it will stay the same

• what does this have to do with the price of tea in China?

Demand for a product is said to be _______ when a change in price causes very little change in quantity demanded.

• elastic 

• inelastic

• related

• rigid

Insulin for a diabetic has a/an _______ demand.

• elastic

• inelastic