Supply Demand and Prices

What are the characteristics of demand?

• the desire and ability to buy a product

• the ability and willingness to buy a product

• the willingness and desire to buy a product

• the desire, ability, and willingness to buy a product

A hungry man is willing to pay a high price for food. After he is no longer hungry, he is not willing to pay the same high price. Which of the following best defines this example?

• a complement

• diminishing marginal utility

• unit elasticity

• the substitution effect

On a demand curve, movement along the curve, as opposed to a shift in the entire curve, is a result of ___

• a change in price.

• an increase in demand.

• a decrease in demand

• a change in demand.

Which would an economist consider a likely substitute for coffee?

• water

• tea

• chicken

• donuts

Which product most likely has a demand that is inelastic?

• a meal at a restaurant

• green beans

• a vital medicine

• a vacation

What test do economists use to measure elasticity?

• utility

• revenue

• total expenditures

• demand

A demand schedule is best described as _______

• a graph.

• an incentive

• data

• a time line

When the price of something increases, the quantity demanded ____

• increases

• decreases

• remains unchanged

• reverses.

What is the relationship between income and demand?

• A decrease in income increases demand

• A decrease in price decreases income.

• An increase in price increases income.

• An increase in income increases demand.

For which product is demand likely to be the most elastic?

• a product with no substitutes

• a product with inadequate substitutes

• a product with many adequate substitutes

• it is impossible to tell