Economics Unit 2 Markets Pre test

What is demand?

• How much of a product consumers are willing and able to buy at each price during a given time period

• How much of a product consumers are willing and able to sell at each price during a given time period

• How much of a product producers are willing and able to buy at each price during a given time period

• How much of a product producers are willing and able to sell at each price during a given time period

All else being equal, the law of demand says...

• As price goes up quantity demanded goes down

• As price goes down, quantity demanded goes up

• As prices go up, quantity demanded goes up

• As prices go down, quantity demanded goes down

All else being equal, the substitution effect says...

• As prices increase, consumers will look for alternative but similar products

• As prices increase, consumers will not look for alternative but similar products

• As prices decrease, consumers will look for alternative but similar products

• As prices decrease, consumers will not look for alternative but similar products

All else being equal, the income effect says...

• As incomes increase, demand will increase

• As incomes increase, demand will decrease

• As incomes decrease, demand will decrease

• As incomes decrease, demand will increase

What does the law of diminishing marginal utility say?

• Each additional unit of a product consumed provides less additional utility than the previous unit

• Each additional unit of a product consumed provides more additional utility than the previous unit

• Each additional unit of a product consumed has the same amount of utility as the previous unit

• Each additional unit of a product consumed provides more or less additional utility than the previous and subsequent units consumed

Which way does the demand curve slope?

• Down

• Up

• West

• East

What does the elasticity of demand measure?

• the responsiveness of quantity demanded to a change in price

• the responsiveness of quantity demanded to a change in supply

• the responsiveness of quantity supplied to a change in price

• the responsiveness of quantity supplied to a change in demand

What does "elastic demand" mean in terms of changes in quantity demanded?

• A percent change in price results in a larger than percent change in quantity demanded

• A percent change in price results in exactly a percent change in quantity demanded

• A percent change in price results in less than a percent change in quantity demanded

• A percent change in price results in a "snap back" effect in the quantity demanded

What does "unit elastic demand" mean in terms of changes in quantity demanded?

• A percent change in price results in a larger than percent change in quantity demanded

• A percent change in price results in exactly a percent change in quantity demanded

• A percent change in price results in less than a percent change in quantity demanded

• A percent change in price results in a "snap back" effect in the quantity demanded

What does "inelastic demand" mean in terms of changes in quantity demanded?

• A percent change in price results in a larger than percent change in quantity demanded

• A percent change in price results in exactly a percent change in quantity demanded

• A percent change in price results in less than a percent change in quantity demanded

• A percent change in price results in a "snap back" effect in the quantity demanded