Chapter 4 Economics

What are two variables needed to calculate demand?

• The desire and ability to buy a product

• At a given point in time, the price of a product and quantity that would be purchased at that price

• The number of people willing ti buy a product and the number and type of competing products

• Previous number of purchases and the likelihood of future purchases

Which of these is an example of an incentive?

• An economic policy in a country

• The highest price that can be charged for a good or service

• A drop in the price of a product

• An industry owned and controlled by the government

When a price goes up, consumers are more likely to do what?

• Buy more

• Buy less

• Produce more

• Produce less

Why does the Law of Demand state that the relationship between price and the quantity demanded is inverse?

• Because when one goes up, the other goes up

• Because when one goes up, the other stays the same

• Because when one goes up, the other goes down

• Because when one goes up, the other goes up more

What does a market demand curve show?

• The quantities demanded by everyone who is interested in purchasing a product at all possible prices

• The quantities demanded by one person or firm interested in purchasing a product at all possible prices

• The quantity demanded by everyone for each and every possible product in an industry

• The products demanded by everyone in a certain market at all possible prices

In economics, the term utility refers to what?

• The price of a product

• The usefulness of a product

• The production cost of a product

• The re-sale of a product

The only thing that can cause a change in quantity demanded is a

• change in the quantity supplied

• change in price

• change in the demand curve

• change in the supply curve

Whenever there is a change in demand,

• the whole demand curve shifts to the left or to the right

• the quantity demanded changes because of a change in price

• the supply changes because the demand curve shifts

• the supply changes along the existing demand curve

According to the income effect,

• demand in only created on paydays

• when a supplier is selling many goods or services, they feel safe in cutting prices

• as workers move up within a company, they spend more

• a lower price for something leaves consumers with some extra money to spend

the ones with the greatest influence on demand are

• producers, because they establish prices

• consumers, because they decide what and how much to buy

• government, because of a strong central planning authority

• entrepreneurs, because they drive economic growth