Lesson 3 & 4

Question 1

is the value of goods and the cost of making the goods.

Answer 1

Price

Question 2

it is determined by the interaction of the forces of supply and demand.

Answer 2

Price

Question 3

is associated with consumption and is represented by buyers or consumers.

Answer 3

Demand

Question 4

is associated with production and is represented by sellers or producers.

Answer 4

supply

Question 5

this refers to the willingness of the buyers to buy the product at a given price, time and place. There is an element of purchasing power, this means you have the capability to buy the product or service.

Answer 5

Demand

Question 6

shows the inverse relationship between price and quantity demanded.

Answer 6

Demand Schedule

Question 7

“If price increases quantity demanded decreases. If price decreases quantity demanded increases.”

Answer 7

Law of Demand

Question 8

when price of product increases consumers will able to buy less within a given money income.

Answer 8

Income Effect

Question 9

when the price of the product rises consumers shift their purchases to other products whose price are relatively lower.

Answer 9

Substitution Effect

Question 10

this refers to a movement of the demand curve itself, indicating changes in quantities bought at each price.

Answer 10

Change in Demand

Question 11

refers to the movement along a given demand curve caused by change in price.

Answer 11

Change in Quantity Demanded

Question 12

people buy more goods and services when their income increases

Answer 12

Income

Question 13

more people means more demand for goods and services.

Answer 13

Population

Question 14

demand for goods and services increases when people likes it or prefer it.

Answer 14

taste and preferences

Question 15

if price is expected to increase in basic commodities consumers will have panic buying.

Answer 15

Price Expectations

Question 16

when price of certain product increases buyers tend to buy substitute product.

Answer 16

Price of related goods

Question 17

the theory is only true and correct if the assumption of ceteris paribus is applied, which means all other things are equal or constant.

Answer 17

Validity of the Law of Demand

Question 18

these are commodities whose demand varies directly with money supply (ex. Appliances; jewelry).

Answer 18

Superior/Normal goods

Question 19

these are goods whose demand varies inversely with money income (ex. Used clothing; second hand cars).

Answer 19

Inferior goods

Question 20

the price of one good and the demand for the other are directly related (ex. Coke & Pepsi; Ariel & Surf laundry powder soap)

Answer 20

Substitute goods

Question 21

these are goods that go together and that they are jointly demanded. The price of one good and the demand for the other are inversely related (ex. Car and gasoline; mobile phone and battery).

Answer 21

Complementary goods

Question 22

these are goods which are not related at all (ex. Bread and nails; paper and glass).

Answer 22

Independent goods

Question 23

refers to the willingness of the seller or producer to sell or produce the product at a given price, time and place.

Answer 23

Supply

Question 24

shows the direct relationship between price and quantity.

Answer 24

Supply Schedule

Question 25

“If price increases quantity supply increases. If price decreases quantity supply decreases.”

Answer 25

Law of supply

Question 26

refers to the movement of the supply curve indicating changes in quantity bought at each price.

Answer 26

change in supply

Question 27

refers to the movement along the supply curve caused by the change in price.

Answer 27

change in quantity supplied

Question 28

this refers to the techniques or methods of production, which increases supply of goods.

Answer 28

Technology

Question 29

this refers to raw materials, labor and the like. Thus, an increase of these increase the cost of production and decrease of quantity supplied.

Answer 29

Cost of production

Question 30

more sellers means more supply and vice versa.

Answer 30

Number of sellers

Question 31

changes in the price of goods affect the supply of such goods. An increase of price of one good, decreases its quantity supplied and increases the quantity supplied of its substitute product.

Answer 31

Prices of other goods

Question 32

if producers expect prices to rise very soon, they usually keep their goods and then release them in the market when the prices are already high.

Answer 32

Price Expectations

Question 33

taxes increase cost of production and it discourages production because it reduces the earnings of businessmen.

Answer 33

Taxes and subsidies

Question 34

is a situation where quantity supplied is equal to quantity demanded.

Answer 34

Equilibrium Price

Question 35

sellers are willing to sell at a higher price

Answer 35

Surplus

Question 36

buyers are willing to purchase at a lower price

Answer 36

shortage

Question 37

indicates the extent to which changes in price or other factors cause changes in the quantity demanded. Mankiw (2018) explains the three classifications of demand elasticity: price elasticity of demand, income elasticity of demand, and cross elasticity of demand.

Answer 37

Demand Elasticity

Question 38

refers to the reactions or responses of the buyers to changes in the price of goods and services.

Answer 38

Price Elasticity of Demand

Question 39

where a change in price results in a greater change in quantity demanded.

Answer 39

Elastic Demand

Question 40

where a change in price results in a lesser change in quantity demanded.

Answer 40

Inelastic Demand

Question 41

when a change in price results in an equal change in quantity demanded.

Answer 41

Unitary Demand

Question 42

refers to the determination of how much the quantity demanded of an excellent response to a change in consumers’ income, computed as the percentage change in the amount demanded divided by the percentage change in income.

Answer 42

Income Elasticity of Demand

Question 43

which is how responsive or elastic the quantity demanded good is in response to a change in the price of another good.

Answer 43

Cross Elasticity of Demand

Question 44

is the measure of the responsiveness in quantity supplied to a change in price for a specific good.

Answer 44

Price Elasticity of Supply

Question 45

refers to a change in price results to a greater difference in quantity supplied.

Answer 45

Elastic Supply

Question 46

refers to a change in price results to a lesser change in quantity supplied.

Answer 46

Inelastic Supply

Question 47

a change in price results to an equal change in quantity supplied. Goods are classified as semi-industrial or semi-agricultural products.

Answer 47

Unitary Supply

Question 48

a change in price results to an equal change in quantity supplied. Goods are classified as semi-industrial or semi-agricultural products.

Answer 48

Unitary Supply