Demand Review

A music store holds a one-day half-price sale on all CDs. Consumers react to the sale by buying more CDs than on a typical day. This action is an example of

• elasticity of demand.

• the substitution effect.

• the law of demand.

• total revenue.

If you create a demand schedule for an individual and for a market for the same product, what will remain the same in both schedules, we stated in class it was the independent variable?

• prices of the good or service

• demand curve

• percent difference at each price

• quantity demanded

Use the graph below to answer the following question. The graph shows a shift in the market demand curve for a certain brand of shirt. The market demand curve predicts

• the highest or lowest future prices for these shirts.

• how people will change the number of shirts they buy.

• the long-term popularity of certain shirt brands.

• whether the quantity of shirts demanded will remain constant.

How many fewer shirts are sold at the new demand level for any given price?

• 200

• 300

• 400

• 500

Your demand for a good is inelastic if you consider the good to be a.

• inferior

• essential

• normal

• replaceable

The substitution effect and the income effect describe

• how income changes when buyers change jobs.

• choices that producers make to improve goods.

• factors that influence consumer buying choices.

• market changes that affect production of goods.

Which of the following is the correct mathematical formula for calculating elasticity of demand?

• percent change in price demanded/percent change in quantity

• percent change in price/percent change in market demand

• percent change in substitutes/percent change in value demanded

• percent change in quantity demanded/percent change in price

The price of cranberry juice suddenly increases. As a result, Glenda begins drinking more grape juice, which is less expensive, but tastes just as good to her. In this case, Glenda’s elastic demand is due to

• availability of substitutes.

• relative importance.

• necessities versus luxuries.

• change over time.

Due to an increase in her rent, Isa needs to cut back her spending on other items. Which of the following types of goods will Isa consume less of?

• substitutes

• normal goods

• inferior goods

• complements

If a store owner notices that demand for all types of bread has been dropping steadily over the last year, while the price has changed very little, what conditions might she be seeing?

• a change in the quantity demanded due to the income effect

• a change in demand due to a popular low-carbohydrate diet

• a shift right due to the introduction of bread-making machines

• a demand curve shift to the right due to the substitution of inferior goods