Matching
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Identifying Key Terms
Match each term with the correct
statement below. a. | elasticity of demand | f. | total revenue | b. | substitution
effect | g. | normal
good | c. | law of demand | h. | inferior good | d. | complement | i. | demand curve | e. | substitute | j. | ceteris paribus |
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1.
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the way that a change in price determines whether or not consumers buy
goods
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2.
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a good that consumers will demand more of when their incomes increase
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3.
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a good that is always used with another good
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4.
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a measure of how people change their buying patterns when prices change
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5.
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a good that replaces another demanded good
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6.
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what happens when consumers react to an increase in a good’s price by
consuming less of that good and more of other goods
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7.
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the amount of money a company receives by selling goods or services
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8.
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a graphic representation of a demand schedule
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Identifying Key Terms
Match each term with the correct
statement below. a. | total revenue | f. | elasticity of
demand | b. | income effect | g. | demand curve | c. | elastic | h. | substitute | d. | inferior
good | i. | ceteris
paribus | e. | normal good | j. | complement |
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9.
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the assumption that nothing but the price of a good will change
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10.
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a measure of how consumers react to a change in the price of a good
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11.
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a good consumed instead of one whose price has risen
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12.
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a good for which the demand falls when income rises
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13.
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a good that is bought and used along with another good
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14.
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a graphic representation of the quantities of a good that will be bought at
each price
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15.
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demand that is very sensitive to a change in price
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16.
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the change in consumption resulting from a change in real income
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Multiple Choice
Identify the choice that best completes the
statement or answers the question.
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17.
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Jasmine is willing to buy 40 pencils at 25 cents apiece. When the price is ten
cents apiece, she is willing to buy 100 pencils. Which of the following statements could be true
about Jasmine’s demand for pencils?
a. | She will buy 20 pencils at 20 cents apiece. | b. | She will buy 80
pencils at 15 cents apiece. | c. | She will buy 100 pencils at 5 cents
apiece. | d. | None of these statements is likely to be true. |
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18.
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What term describes demand with an elasticity of less than 1?
a. | inelastic | c. | unitary elastic | b. | low | d. | elastic |
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19.
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What shows the quantities of products demanded at each price by all consumers in
a market?
a. | a market demand schedule | c. | a market pricing
list | b. | a schedule of consumer prices | d. | an elasticity and consumption
list |
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20.
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What is a company’s total revenue?
a. | the amount a company receives for selling its goods | b. | the amount of goods
a company can expect to sell | c. | the price of a company’s
goods | d. | the amount of profit a company can expect to make |
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21.
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Will, a sprinter on the track team, has inelastic demand for sports drinks. The
local store has raised the price of a sports drink from $1.00 to $1.50. Which of the following could
describe Will’s response to the price change?
a. | He bought 15 bottles a month at $1.00 and 20 bottles a month at
$1.50. | b. | He bought 10 bottles a month at $1.00 and 8 bottles a month at
$1.50. | c. | He bought 10 bottles a month at $1.00 and 5 bottles a month at
$1.50. | d. | He bought 15 bottles a month at $1.00 and 5 bottles a month at
$1.50. |
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22.
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What does unitary elastic demand mean?
a. | The percentage change in quantity demanded is exactly equal to the percentage change
in price. | b. | The demand is inelastic at a low price but becomes elastic as the price
rises. | c. | The elasticity of demand is different at each unit on the price
range. | d. | The elasticity of demand is mathematically
determined. |
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23.
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What determines the price and the quantity produced of most goods?
a. | the interaction of supply and demand | b. | the quality of the goods that are
produced | c. | the availability of substitutes for the goods | d. | the consumer’s
perception of necessity |
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24.
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A shift in the demand curve means which of the following?
a. | a change in consumer income | b. | a change in demand at every
price | c. | a rise in prices | d. | a decrease in both price and quantity
demanded |
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25.
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A new restaurant has opened. Ashley’s demand for pizza has decreased and
her demand curve has shifted. Based on Figure 4.4, which combination of price and quantity demanded
would you expect to find on her new demand curve?
a. | $2.00, three slices | c. | $2.00, one slice | b. | $1.00, five slices | d. | $1.50, three
slices |
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26.
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A slice of pizza costs $4.00. Based on Ashley’s demand curve in Figure
4.4, what is her quantity demanded of pizza at this price?
a. | There is not enough information to answer the question. | b. | zero | c. | one | d. | five |
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27.
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According to Figure 4.4, at what price will Ashley’s quantity demanded of
pizza be three slices?
a. | $1.50 | c. | $1.00 | b. | $3.00 | d. | $ .50 |
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28.
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According to Figure 4.4, how many slices of pizza will Ashley buy if the price
is $1.00 per slice?
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29.
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The price of a slice of pizza has just increased by $1 from an earlier, low
price. Based on Ashley’s demand curve in Figure 4.4, which of the following statements is
true?
a. | Ashley will not buy any pizza. | b. | Ashley’s quantity demanded is
unchanged. | c. | Ashley will buy four slices of pizza. | d. | Ashley will buy two fewer slices of
pizza. |
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30.
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According to Figure 4.4, what is Ashley’s elasticity of demand as the
price of a slice of pizza decreases from $2.00 to $1.00?
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31.
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Which of the following events could cause the demand curve for sports magazines
to shift to the right?
a. | The publisher cuts the price of an issue from $3.95 to $2.50. | b. | A local library buys
a subscription to the sports magazine for its reading room. | c. | A star basketball
player interests thousands of people in professional sports for the first time. | d. | The price of an
issue of a popular computer game magazine rises from $2.95 to $3.95. |
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32.
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What does it mean when the demand for a product is inelastic?
a. | There are very few satisfactory substitutes for the product. | b. | A price increase
does not have a significant impact on buying habits. | c. | People will not buy any of the product when the
price goes up. | d. | Customers are sensitive to the price of the product. |
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33.
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How did the existence of the baby boom generation change demand in the United
States?
a. | After they reached the teenage years, the baby boomers were integrated into the
society and no longer affected demand. | b. | The baby boomers did not raise demand until
they became adults, when they had their own money to spend. | c. | Demand was raised
for different goods with each age the baby boomers reached. | d. | People were poorer
because they had so many children, so demand was lowered. |
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34.
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What kind of changes would be expected in the demand of a country that has a
growing population?
a. | a lowering in the demand for automobiles | b. | a rise in the demand
for recreation | c. | a shift in the demand for high-quality food | d. | a rise in the demand
for shelter |
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35.
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When a consumer is able and willing to buy a good or service, he or she creates
which of the following?
a. | demand | c. | elasticity | b. | allocation | d. | consumption |
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36.
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What are inferior goods?
a. | goods that no one wants to buy | b. | goods that are not well
produced | c. | goods for which the demand rises when income falls | d. | goods for which the
demand falls when income rises |
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37.
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The price of movie tickets in a town has risen from $7 to $9. What is the most
likely effect of the change in price?
a. | The quantity demanded of movie tickets will increase. | b. | The demand curve for
movie tickets will move left. | c. | The quantity demanded of movie tickets will
decrease. | d. | The demand curve for movie tickets will move right. |
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38.
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Which of the following goods would be likely to be bought in the same quantity
even if it doubled in price?
a. | computers | c. | telephones | b. | shoes | d. | pencils |
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39.
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How is the current demand for a good related to its future price?
a. | Current demand is not related to future price. | b. | If the price is
expected to rise, current demand will fall. | c. | If the price is expected to drop, current
demand will fall. | d. | If the price is expected to drop, current
demand will rise. |
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40.
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What determines how a change in prices will affect total revenue for a
company?
a. | the company’s pricing policy | c. | elasticity of
demand | b. | values of elasticity | d. | the consumers’ incomes |
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41.
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How is future price related to current demand?
a. | If the price is expected to fall, current demand will rise. | b. | Future price is not
related to current demand. | c. | If the price is expected to rise, current
demand will drop. | d. | If the price is expected to rise, current
demand will rise. |
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42.
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What is a basic principle of the law of demand?
a. | When a good’s price is lower, people will buy more of it. | b. | The higher the
price, the more people will want the good. | c. | Services are of interest in the same way that
goods are. | d. | Everyone has a limited income that they will spend. |
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43.
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When prices rise, which of the following happens to income?
a. | It is used to buy different things. | c. | It goes down. | b. | It buys
less. | d. | It rises to meet
prices. |
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44.
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What kind of system is the United States economy based on?
a. | production | c. | market | b. | centralized | d. | cause and
effect |
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45.
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Which of these events could permanently shift a individual’s demand curve
for umbrellas to the right?
a. | The price of umbrellas decreases significantly as inexpensive umbrellas are imported
from China. | b. | Weather forecasters predict that a major hurricane will hit his city the following
week. | c. | He buys a car so he no longer needs to walk to and wait at a bus stop every morning
to get to work. | d. | He moves from a desert community to a rainy city by the
ocean. |
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46.
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Demand for movie rentals is highly elastic. A video store that raises the price
of a rental will
a. | lose revenue. | c. | gain revenue. | b. | see no change in revenue. | d. | possibly gain or lose
revenue. |
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47.
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When movie rentals were $2.95, Sara rented ten movies a month. The price of a
rental increased by fifty cents and Sara decided to rent two fewer movies a month. When the price
increased by one more dollar, Sarah decided to cut the number of movies she rented in half. What is
her quantity demanded by month at the current price?
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48.
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Alex receives a raise at work and continues to work the same number of hours
each week. His demand for $3 t-shirts, which he considers an inferior good, will
a. | increase. | c. | have no relation to his income. | b. | decrease. | d. | stay the same. |
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49.
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Which of the following is a good that might not be bought when prices
rise?
a. | luxury | c. | complement | b. | substitute | d. | inferior good |
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50.
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What kind of table lists the quantity of a good that a person will buy at
different prices?
a. | demand schedule | c. | market demand curve | b. | market demand schedule | d. | demand curve |
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51.
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Ceteris paribus, or “all other things held constant,” is an
assumption that has which of the following effects on a demand schedule?
a. | It is accurate no matter what changes occur. | b. | It considers the
effects of all possible changes on demand. | c. | It is accurate only at one price
level. | d. | It takes only prices into account. |
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