Econ Unit 4

Question 1

Demand

Answer 1

the desire, ability, and willingness to buy a product, can compete with others who have similar demands

Question 2

Microeconomics

Answer 2

the area of economics that deals with behavior and decision making by small units, such as individuals and firms

Question 3

Demand Schedule

Answer 3

The demand schedule is a listing that shows the various quantities demanded of a partic-ular product at all prices that might prevail in the market at a given time.

Question 4

Demand Curve

Answer 4

a graph showing the quantity demanded at each and every price that might prevail in the market.

Question 5

Market Demand Curve

Answer 5

the demand curve that shows the quantities demanded by everyone who is interested in purchasing the product.

Question 6

Law of Demand

Answer 6

the quantity demanded of a good or service varies inversely with its price. In other words, when the price goes up, quantity demanded goes down. Likewise, when the price goes down, quantity demanded goes up.

Question 7

Marginal utility

Answer 7

the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product

Question 8

diminishing marginal utility

Answer 8

the extra satisfaction we get from using additional quantities of the product begins to diminish.

Question 9

change in quantity demanded

Answer 9

a movement along the demand curve that shows a change in the quantity of the product purchased in response to a change in price.

Question 10

substitution effect

Answer 10

the change in quantity demanded because of the change in the relative price of the product.

Question 11

change in demand

Answer 11

something happens to cause the demand curve itself to shift.

Question 12

income effect

Answer 12

the change in quantity demanded because of a change in price that alters consumers’ real income

Question 13

substitutes

Answer 13

they can be used in place of other products.

Question 14

complements

Answer 14

the use of one increases the use of the other.

Question 15

elasticity

Answer 15

a measure of responsiveness that tells us how a dependent variable such as quantity responds to a change in an independent variable such as price.

Question 16

demand elasticity

Answer 16

the extent to which a change in price causes a change in the quantity demanded

Question 17

elastic

Answer 17

a given change in price causes a relatively larger change in quantity demanded.

Question 18

inelastic

Answer 18

a given change in price causes a relatively smaller change in the quantity demanded.

Question 19

unit elastic

Answer 19

meaning that a given change in price causes a proportional change in quantity demanded.