Econ chapter4

Demand is the desire, ability, and willingness to buy a product or service.

• True

• False

Prices act as a motivating influence, or incentive, that causes an individual to take action.

• True

• False

The Law of Demand states that the quantity demanded of a product varies directly with its price. (As one increases, the other also increases)

• True

• False

The market demand curve shows the quantities supplied by producers at all possible prices.

• True

• False

As people use more and more of a product, they encounter increasing marginal utility.

• True

• False

The market demand curve is created by ________________.

• adding up all that is produced.

• adding up individual demand for a product

• taking the difference of what is produced and what is purchased

• taking the difference of what consumers want

When the price of something increases, the quantity demanded _______________.

• Increases

• Decreases

• reverse

• unchanged

Consider the term marginal utility. Which word is the best synonym for marginal?

• Useful

• Satisfactory

• borderline

• Additional

Why is a demand curve downward sloping?

• because quantity demanded increases as price decreases

• because of the natural elasticity of the market

• because it shows how increasing incentives changes demand

• because it reflects the desire, ability, and willingness of consumers

Why is the Law of Demand called a "law"?

• because it is legally required

• because there are no exceptions to it

• because it has been demonstrated repeatedly

• because it is an economic term