Ch. 4-5 Quiz: Demand and Supply

What is elasticity?

• the amount of variability in consumer prices under normal conditions
• the measure of how often consumers change their minds
• the amount by which businesses can raise prices without losing customers
• the measure of how responsive consumers are to price change

If quantity demanded changes significantly when price changes, how is demand described?

• elastic
• inelastic
• constant
• inconstant

What is a total revenue test used for?

• to measure profit
• to measure demand
• to measure income
• to measure elasticity

Which of the following categories is most likely to have inelastic demand?

• goods that have many substitutes
• goods that have many complements
• goods that have no substitutes
• goods that have no complements

Which economic term is defined as the desire to have a good or service and the ability to pay for it?

• complement
• elasticity
• demand
• substitute

Which of the following restates the law of demand?

• When prices go down, demand increases; when prices go up, demand decreases.
• When prices go up, demand increases; when prices go down, demand decreases
• When prices go down, quantity demanded increases; when prices go up, quantity demanded decreases.
• When prices go up, quantity demanded increases; when prices go down, quantity demanded decreases.

an increase or decrease in the amount that consumers are willing and able to buy in response to a change in price

• change in quantity demanded
• complements
• income effect
• inferior goods
• law of diminishing marginal utility

goods that consumers demand more of when their incomes rise

• normal goods
• change in quantity demanded
• complements
• income effect
• inferior goods

a change in the amount that consumers will buy because the purchasing power of their money changes

• income effect
• change in quantity demanded
• complements
• inferior goods
• law of diminishing marginal utility

the idea that the marginal benefit of using each additional unit of a product during a given period will decline

• law of diminishing marginal utility
• change in quantity demanded
• complements
• income effect
• inferior goods