economics ch. 4

Question 1

relationship between a good’s price and the amount that people are willing to buy

Answer 1

demand

Question 2

relationship between price and amount people are willing to buy

Answer 2

supply

Question 3

value in use is the value that is directly related to

Answer 3

the benefits their owners receive through their use

Question 4

value in exchange is

Answer 4

what a good is worth in exchange for another good

Question 5

price is the amount of money that

Answer 5

a buyer pays a seller for a good

Question 6

market prices are prices at which goods

Answer 6

can be sold at an open market

Question 7

diminishing marginal utility states that as the

Answer 7

supply or services increase, the satisfaction decreases

Question 8

marginal utility is the

Answer 8

amount of satisfaction that results from a one-unit increase of product

Question 9

total utility is the total amount of

Answer 9

satisfaction received from possessing a certain amount of a good

Question 10

law of demand explains the inverse between

Answer 10

price of a good and amount people choose to buy

Question 11

income effect states

Answer 11

that when the price falls the demand increases

Question 12

substitution effect indicates that people tend to

Answer 12

substitute cheaper goods for expensive goods

Question 13

demand schedule is a list of numbers

Answer 13

that compares price and quantity demanded

Question 14

demand curve is a graphic representation of the

Answer 14

quantity of goods purchased at different prices

Question 15

demand curve always

Answer 15

slopes downward and to the right

Question 16

normal good is related to consumers’

Answer 16

incomes

Question 17

inferior goods means that demand for goods

Answer 17

decrease as incomes increase and vice versa

Question 18

substitutes are a good capable of

Answer 18

being used in place of another

Question 19

complements are goods that are often used in

Answer 19

conjunction with another

Question 20

law of supply is the law that states the bond between

Answer 20

prices of a good and amount available

Question 21

supply schedule is a list of numbers that

Answer 21

compare price w quantity supplied

Question 22

supply curve shows

Answer 22

quantity of goods at diff prices

Question 23

subsidies is assistance given by government to a

Answer 23

business to encourage production

Question 24

equilibrium is the point at which

Answer 24

quantity demanded and quantity supplied are equal

Question 25

shortage is the point in which the quantity demanded

Answer 25

exceeds the quantity supplied at a given price

Question 26

surplus is the point at which the quantity supplied exceeds the

Answer 26

quantity demanded at a given price