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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a good that is always used with another good
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2.
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a measure of how people change their buying patterns when prices change
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3.
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a good that replaces another demanded good
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4.
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the amount of money a company receives by selling goods or services
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5.
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a graphic representation of a demand schedule
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6.
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a good that consumers will demand more of when their incomes increase
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7.
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the way that a change in price determines whether or not consumers buy
goods
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8.
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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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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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a good for which the demand falls when income rises
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10.
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the assumption that nothing but the price of a good will change
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11.
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a good that is bought and used along with another good
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12.
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a graphic representation of the quantities of a good that will be bought at
each price
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13.
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the change in consumption resulting from a change in real income
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14.
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demand that is very sensitive to a change in price
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15.
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a good consumed instead of one whose price has risen
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16.
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a measure of how consumers react to a change in the price of a good
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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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Ceteris paribus, or “all other things held constant,” is an
assumption that has which of the following effects on a demand schedule?
a. | It takes only prices into account. | b. | It considers the effects of all possible
changes on demand. | c. | It is accurate only at one price
level. | d. | It is accurate no matter what changes occur. |
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18.
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When prices rise, which of the following happens to income?
a. | It goes down. | c. | It buys less. | b. | It is used to buy different
things. | d. | It rises to meet
prices. |
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19.
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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. | $1.50, three slices | c. | $2.00, three slices | b. | $2.00, one slice | d. | $1.00, five
slices |
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20.
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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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21.
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According to Figure 4.4, at what price will Ashley’s quantity demanded of
pizza be three slices?
a. | $ .50 | c. | $1.50 | b. | $3.00 | d. | $1.00 |
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22.
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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. | one | b. | zero | c. | There is not enough
information to answer the question. | d. | five |
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23.
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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 buy four slices of pizza. | b. | Ashley will not buy any
pizza. | c. | Ashley will buy two fewer slices of pizza. | d. | Ashley’s
quantity demanded is unchanged. |
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24.
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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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25.
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A shift in the demand curve means which of the following?
a. | a rise in prices | b. | a change in demand at every
price | c. | a change in consumer income | d. | a decrease in both price and quantity
demanded |
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26.
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Demand for movie rentals is highly elastic. A video store that raises the price
of a rental will
a. | see no change in revenue. | c. | possibly gain or lose
revenue. | b. | lose revenue. | d. | gain revenue. |
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27.
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What term describes demand with an elasticity of less than 1?
a. | unitary elastic | c. | low | b. | elastic | d. | inelastic |
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28.
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What are inferior goods?
a. | goods for which the demand rises when income falls | b. | goods that are not
well produced | c. | goods for which the demand falls when income rises | d. | goods that no one
wants to buy |
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29.
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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. | pencils | c. | computers | b. | shoes | d. | telephones |
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30.
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How did the existence of the baby boom generation change demand in the United
States?
a. | People were poorer because they had so many children, so demand was
lowered. | b. | Demand was raised for different goods with each age the baby boomers
reached. | c. | After they reached the teenage years, the baby boomers were integrated into the
society and no longer affected demand. | d. | The baby boomers did not raise demand until
they became adults, when they had their own money to spend. |
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31.
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Which of the following is a good that might not be bought when prices
rise?
a. | complement | c. | substitute | b. | luxury | d. | inferior good |
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32.
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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. | consumption | c. | allocation | b. | demand | d. | elasticity |
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33.
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Which of the following events could cause the demand curve for sports magazines
to shift to the right?
a. | A star basketball player interests thousands of people in professional sports for the
first time. | b. | The publisher cuts the price of an issue from $3.95 to $2.50. | c. | The price of an
issue of a popular computer game magazine rises from $2.95 to $3.95. | d. | A local library buys
a subscription to the sports magazine for its reading room. |
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34.
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What determines how a change in prices will affect total revenue for a
company?
a. | elasticity of demand | c. | the consumers’ incomes | b. | the company’s
pricing policy | d. | values of
elasticity |
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35.
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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. | Services are of
interest in the same way that goods are. | c. | The higher the price, the more people will want
the good. | d. | Everyone has a limited income that they will spend. |
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36.
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What determines the price and the quantity produced of most goods?
a. | the consumer’s perception of necessity | b. | the interaction of
supply and demand | c. | the availability of substitutes for the
goods | d. | the quality of the goods that are produced |
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37.
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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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38.
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What shows the quantities of products demanded at each price by all consumers in
a market?
a. | a market pricing list | c. | a market demand schedule | b. | an elasticity and
consumption list | d. | a schedule
of consumer prices |
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39.
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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. | People will not buy
any of the product when the price goes up. | c. | A price increase does not have a significant
impact on buying habits. | d. | Customers are sensitive to the price of the
product. |
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40.
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What kind of system is the United States economy based on?
a. | production | c. | centralized | b. | market | d. | cause and
effect |
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41.
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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. | stay the same. | b. | decrease. | d. | have no relation to his
income. |
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42.
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What does unitary elastic demand mean?
a. | The elasticity of demand is different at each unit on the price
range. | b. | The elasticity of demand is mathematically determined. | c. | The percentage
change in quantity demanded is exactly equal to the percentage change in price. | d. | The demand is
inelastic at a low price but becomes elastic as the price rises. |
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43.
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How is future price related to current demand?
a. | If the price is expected to rise, current demand will drop. | b. | If the price is
expected to fall, current demand will rise. | c. | If the price is expected to rise, current
demand will rise. | d. | Future price is not related to current
demand. |
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44.
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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 80 pencils at 15 cents apiece. | b. | She will buy 20
pencils at 20 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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45.
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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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46.
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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 10 bottles a month at $1.00 and 5 bottles a month at
$1.50. | b. | He bought 15 bottles a month at $1.00 and 5 bottles a month at
$1.50. | c. | He bought 10 bottles a month at $1.00 and 8 bottles a month at
$1.50. | d. | He bought 15 bottles a month at $1.00 and 20 bottles a month at
$1.50. |
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47.
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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. | He moves from a desert community to a rainy city by the ocean. | c. | Weather forecasters
predict that a major hurricane will hit his city the following week. | d. | He buys a car so he
no longer needs to walk to and wait at a bus stop every morning to get to
work. |
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48.
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What is a company’s total revenue?
a. | the amount of profit a company can expect to make | b. | the amount a company
receives for selling its goods | c. | the amount of goods a company can expect to
sell | d. | the price of a company’s goods |
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49.
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How is the current demand for a good related to its future price?
a. | If the price is expected to rise, current demand will fall. | b. | Current demand is
not related to future price. | c. | If the price is expected to drop, current
demand will rise. | d. | If the price is expected to drop, current
demand will fall. |
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50.
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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 demand curve for movie tickets will move left. | b. | The quantity
demanded of movie tickets will increase. | c. | The quantity demanded of movie tickets will
decrease. | d. | The demand curve for movie tickets will move right. |
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51.
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What kind of changes would be expected in the demand of a country that has a
growing population?
a. | a rise in the demand for shelter | b. | a lowering in the demand for
automobiles | c. | a shift in the demand for high-quality food | d. | a rise in the demand
for recreation |
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