ECON: Demand

The law of demand states that

• consumers will buy more when a price increases.

• price will not influence demand.

• consumers will buy less when a price decreases.

• consumers will buy more when a price decreases.

If the price of a good rises and income stays the same, what is the effect on demand?

• The prices of other goods drop.

• Fewer goods are bought.

• More goods are bought.

• Demand stays the same.

The ___________________ occurs when consumers react to an increase in a good’s price by consuming less of that good and more of other goods.

• substitution effect

• income effect

• demand schedule

• market demand schedule

Ceteris paribus is a Latin phrase economists use meaning “all other things held constant.”

• “all other things held constant.”

• "all things are in constant change."

• "all things are ever changing."

• "all things will never be the same."

Which of these factors can lead to a change in demand?

• income

• consumer expectations

• population

• all of these

_______________ are two goods that are bought and used together.

• Substitutions

• Complements

• Conversions

• Subversion

Which of the following statements is accurate?

• When two goods are complementary, increased demand for one will cause decreased demand for the other.

• When two goods are complementary, increased demand for one will cause increased demand for the other.

• If two goods are substitutes, increased demand for one will cause increased demand for the other.

• A drop in the price of one good will cause increased demand for its substitute.

What does elasticity of demand measure?

• an increase in the quantity available

• a decrease in the quantity demanded

• how much buyers will cut back or increase their demand when prices rise or fall

• the amount of time consumers need to change their demand for a good

What effect does the availability of many substitute goods have on the elasticity of demand for a good?

• Demand is elastic.

• Demand is inelastic.

• Demand is unitary elastic.

• The availability of substitutes does not have an effect.

A company’s ______________________ is the total amount of money the company receives from selling its goods or services.

• profit

• total revenue

• elasticity

• margin