Name: ______________________
Class: _________________
Date: _________
ID: A
Economics Chapter 4 Review
Completion
Complete each statement.
1.
People will buy more of a good when its price falls and less when its price rises, according to the
_______.
2. A consumer’s desire to buy something and the ability to pay for it is called _____.
3. Replacing a good with a similar good because of a change in prices is an example of the _____.
4. When people consume less due to rising prices, it is an example of _____.
5. To show how demand for a good will change at specific price points, economists use a ____.
6. A graph that shows how demand will change when prices change is a _____.
7. If a consumers will buy much less of a good after a price change, demand is _______.
8. When demand does not change much after a price change, demand is ______.
9. To determine how price changes will affect demand, economists measure _______.
10. When elasticity of demand is exactly 1, demand is described as _______.
11. The amount of money a company makes from selling its goods is _______.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 12. Which is an example of the law of demand at work?
a. The price of pizza goes up when the price of cheese goes up.
b. Demand for pizza goes down when tacos become more popular.
c. The price of pizza falls when demand for pizza falls.
d. Demand for pizza rises when the price of pizza falls..
B. Main Ideas
Directions: Identify the choice that best completes the statement or answers the question.
____ 13. A music store holds a one-day half-price sale on all CDs. Consumers react to the sale by buying more CDs
than on a typical day. This action is an example of
a. elasticity of demand.
c. the law of demand.
b. the substitution effect.
d. total revenue.
1
Name: ______________________
ID: A
____ 14. During a six-month period, the price of a popular shoe rises from $28 to $39 a pair. During this same
period, demand for this shoe will probably
a. increase.
c. remain constant.
b. decrease.
d. disappear.
____ 15. If prices rise and income stays the same, what is the effect on demand?
a. More is bought of some goods and less c. More goods are bought.
of others.
b. Fewer goods are bought.
d. Demand stays the same.
____ 16. How does the substitution effect work when the price of an item drops?
a. The item becomes less and less popular c. Consumers buy the item as a substitute
as price drops.
for other things.
b. The substitutes for the item also suffer d. Consumers buy the item even if they do
a drop in prices.
not particularly want it.
____ 17. The substitution effect and the income effect describe
a. how income changes when buyers
c. factors that influence consumer buying
change jobs.
choices.
b. choices that producers make to
d. market changes that affect production
improve goods.
of goods.
____ 18. Why does an economist create a market demand
a. to learn what demands the market will c.
make under unusual conditions
b. to have an idea of how a market would d.
change if conditions in an area changed
schedule?
to predict how people will change their
buying habits when prices change
to show how various conditions can
change the demand for a good
____ 19. In order to have demand for a good, consumers must
a. desire the good and have the money to c. know where the stores are and have a
buy it.
credit card.
b. be able to create the good and sell it to d. understand how it works and be able to
others.
get it.
____ 20. If you create a demand schedule for an individual and for a market for the same product, what will remain
the same in both schedules?
a. prices of the good or service
c. percent difference at each price
b. demand curve
d. quantity demanded
2
Name: ______________________
ID: A
Demand for Beth’s Bagels
Price of a bagel
Quantity demanded
per day
$.25
$.50
____ 21. Which series of numbers should be entered into the second column of the demand schedule, from top to
bottom?
3
Name: ______________________
a.
b.
$1.50 to $.25
0 to 50
ID: A
c.
d.
50 to 0
$.75 to $1.50
____ 22. What does the demand curve tell you about how consumer behavior changes if Beth’s Bagels raises the
price from $.25 to $1.50?
a. Demand shifts to the right.
c. Quantity demanded increases.
b. Demand shifts to the left.
d. Quantity demanded decreases.
____ 23. The graph shows a shift in the market demand curve for a certain brand of shirt. The market demand
curve predicts
a. the highest or lowest future prices for
c. the long-term popularity of certain
these shirts.
shirt brands.
b. how people will change the number of d. whether the quantity of shirts demanded
shirts they buy.
will remain constant.
____ 24. Economists say that a demand curve is accurate only as long as the ceteris paribus assumption is true.
This means that
a. goods are used in place of one another. c. consumer desire for goods remains
elastic.
b. all things other than price hold
d. anticipated supply can keep up with
constant.
prices.
4
Name: ______________________
ID: A
____ 25. When there is a decrease in the quantity demanded, and price is the only factor affecting demand, what
type of movement will the demand curve show?
a. a shift to the left
c. along the curve to a higher quantity
demanded
b. along the curve to a higher price
d. a shift to the right
____ 26. How many fewer shirts are sold at the new demand level for any given price?
a. 200
c. 400
b. 300
d. 500
____ 27. Due to an increase in her rent, Isa needs to cut back her spending on other items. Which of the following
types of goods will Isa consume less of?
a. substitutes
c. inferior goods
b. normal goods
d. complements
____ 28. If a store owner notices that demand for all types of bread has been dropping steadily over the last year,
while the price has changed very little, what two conditions might she be seeing?
a. a change in the quantity demanded due c. a shift right due to the introduction of
to the income effect
bread-making machines
b. a change in demand due to a popular
d. a demand curve shift to the left due to
low-carbohydrate diet
the substitution of inferior goods
____ 29. How can expectations about the future change consumer behavior?
a. Immediate demand for a good will drop if the price is expected to stay the same.
b. Immediate demand for a good will rise if the good is expected to be plentiful.
c. Immediate demand for a good will rise if its price is expected to rise.
d. Immediate demand for a good will drop if there are no substitutes available.
____ 30. What can cause an entire demand curve to shift?
a. a decrease in price
c. uncertainty about the future price
b. an increase in price
d. a change in demographics
____ 31. John gets a raise and decides to start buying enriched pasta instead of cheaper instant noodles. For John,
instant noodles are examples of
a. inelasticity.
c. market demand.
b. complements.
d. inferior goods.
____ 32. Businesses often use information such as age, income level, and occupation to sell products to certain
groups of people. Such statistical data are called
a. revenues.
c. markets.
b. complements.
d. demographics.
____ 33. How might advertising lead to a shift in the demand curve?
a. by increasing the popularity of inferior c. by allowing the law of demand to
goods
operate freely
b. by leading to a shift in demographics
d. by helping to create fads and trends
5
Name: ______________________
ID: A
____ 34. In July, an automobile company announces that next year’s models, with more features, will start to
arrive in September or October. What is likely to happen to demand for this year’s model in August?
a. Demand will rise in anticipation of
c. Demand will go to zero because
higher prices.
everyone will want the new model.
b. Demand will fall in anticipation of
d. Demand will stay the same and price
lower prices.
will stay the same.
____ 35. How can the demand for one good be affected by increased demand for another one?
a. When goods are bought together, increased demand for one will increase demand for
the other.
b. If goods are used together, increased demand for one will increase demand for the
other.
c. If goods are substitutes, increased demand for one will increase demand for the other.
d. A drop in the price for a good will increase demand for it and its substitute.
____ 36. Owners of digital cameras have to buy memory cards in order to use the cameras. Cameras and memory
cards are
a. substitutes.
c. unrelated.
b. complements
d. elastic.
____ 37. What does elasticity of demand measure?
a. an increase in the quantity available
b. how buyers will cut back or increase
their demand when price rises or falls
c.
d.
a decrease in the quantity demanded
the amount of time consumers need to
change their demand for a good
____ 38. How does the price range affect the elasticity of demand for a product?
a. Demand for all products is elastic if the c. Demand for a good can be inelastic at a
price is low enough.
low price, but elastic at a high price.
b. Demand for a good can be elastic at a
d. Price range has little effect on elasticity
low price but inelastic at a high price.
of demand for a good.
____ 39. Which of the following is the correct mathematical formula for calculating elasticity of demand?
a. percentage change in price demanded / c. percentage change in substitutes /
percentage change in quality desired
percentage change in value demanded
b. percentage change in overall price /
d. percentage change in quantity
percentage change in market demanded
demanded / percentage change in price
____ 40. If the elasticity of demand for a good at a certain price is less than one, then the demand is
a. elastic.
c. unitary elastic.
b. inelastic.
d. negative elastic.
____ 41. What effect does the availability of many substitutes have on the elasticity of demand for a good?
a. Demand is elastic.
c. Demand is unitary elastic.
b. Demand is inelastic.
d. Demand is not affected.
____ 42. Your demand for a good is inelastic if you consider the good to be
a. inferior.
c. normal.
b. essential.
d. replaceable.
6
Name: ______________________
ID: A
____ 43. The price of cranberry juice suddenly increases. As a result, Glenda begins drinking more grape juice,
which is less expensive, but tastes just as good to her. In this case, Glenda’s elastic demand is due to
a. availability of substitutes.
c. necessities versus luxuries.
b. relative importance.
d. change over time.
____ 44. Cruz likes to chew one piece of sugarless gum each day. The cost of gum is only a tiny fraction of his
weekly budget. The company that makes his favorite gum doubles its prices. In response, Cruz will
probably
a. buy a cheaper brand.
c. give up chewing gum.
b. pay the doubled cost.
d. try many different brands.
____ 45. How does a person’s perception of a good as a necessity or a luxury affect his or her purchase of it?
a. If a good is perceived as a luxury, demand becomes elastic.
b. People who have a lot of money will buy goods even if they think they are a luxury.
c. A good that is perceived as expensive will no longer be considered a necessity.
d. A good that is perceived as a necessity will be purchased even if the price rises.
____ 46. In a certain country, the price of meat increases dramatically. At first, most people continue to pay the
extra price, but after a while consumers begin to adjust their habits to eat less meat. This situation of
inelastic demand followed by elastic demand is an example of
a. availability of substitutes.
c. necessities versus luxuries.
b. relative importance.
d. change over time.
____ 47. How does elasticity affect a company’s pricing policy?
a. If demand is inelastic, the company
c. If demand is unitary elastic, the
knows that an increase in price would
company knows that a decrease in price
reduce total revenues.
would decrease total revenues.
b. If demand is elastic at the current price, d. If demand is unitary elastic, the
the company knows that an increase
company knows that an increase price
price would reduce total revenues.
would increase total revenues.
____ 48. Businesses multiply the price they charge for a good by the quantity sold to calculate
a.
b.
profit shares.
elastic demand.
c.
d.
total revenue.
market demand.
____ 49. Knowing whether its products are elastic or inelastic can help a company maximize its
a.
b.
price of goods.
total revenue.
c.
d.
7
quantity size.
available substitutes.
Name: ______________________
ID: A
Matching
A. Key Terms and Concepts
Directions: Match each term with the correct phrase below.
a.
b.
c.
d.
e.
f.
g.
h.
i.
demand
law of demand
substitution effect
income effect
demand schedule
market demand schedule
demand curve
ceteris paribus
normal good
j.
k.
l.
m.
n.
o.
p.
q.
r.
inferior good
demographics
complements
substitutes
elasticity of demand
inelastic
elastic
unitary elastic
total revenue
____ 50. concept that consumers will buy more of a good when its price is lower and less when its price is higher
____ 51. desire to own something and the ability to pay for it
____ 52. consuming less of a good and more of another as a reaction to a price increase
____ 53. change in consumption that results when a price increase causes real income to decline
____ 54. table listing the quantity of a good that all consumers will buy at various prices
____ 55. table that lists the quantity of a good a person will buy at various prices in a market
____ 56. graphic representation of a demand schedule
____ 57. good that consumers demand more of when their incomes increase
____ 58. good that consumers demand less of when their incomes increase
____ 59. goods that are used in place of one another
____ 60. two goods that are bought and used together
____ 61. when demand is very sensitive to price changes
____ 62. measure of how consumers respond to price changes
____ 63. when demand is not very sensitive to price changes
____ 64. demand whose elasticity is exactly equal to one
____ 65. entire amount of money a company receives by selling goods or services
8
Name: ______________________
ID: A
Short Answer: You MUST answer TWO QUESTIONS for FIVE POINTS EACH. Additional correct
answers earn one point of extra credit.
C. Critical Thinking and Writing
Directions: Use complete sentences to answer the questions below.
66. Why is it important for businesses to understand the demographics of their markets?
67. Suppose the consumption of hot dogs drops dramatically due to changing public tastes and price
increases. How should bakeries that produce hot dog buns react to this development?
68. During the spring and early summer, consumer demand for bathing suits is relatively inelastic. During the
fall and winter, demand becomes elastic. Based on this information, when would be the best time for
bathing suit companies to increase prices?
69. Give an example of a good or service for which elasticity of demand may change over time rather than
immediately, and discuss why this happens.
9
ID: A
Economics Chapter 4 Review
Answer Section
COMPLETION
1. ANS: law of demand
PTS: 2
DIF: L3
TOP: Demand | Law of Demand
2. ANS: demand
REF: A.85
OBJ: 4.1.1 Explain the law of demand.
PTS: 2
DIF: L3
TOP: Demand | Demand
3. ANS: substitution effect
REF: A.85
OBJ: 4.1.1 Explain the law of demand.
PTS:
OBJ:
TOP:
4. ANS:
2
DIF: L3
REF: A.87
4.1.2 Describe how the substitution effect and the income effect influence decisions.
Demand | Substitution Effect
income effect
PTS:
OBJ:
TOP:
5. ANS:
2
DIF: L3
REF: A.87
4.1.2 Describe how the substitution effect and the income effect influence decisions.
Demand | Income Effect
market demand schedule
PTS:
OBJ:
TOP:
6. ANS:
2
DIF: L3
REF: A.88
4.1.3 Create a demand schedule for an individual and a market.
Demand | Market Demand Schedule
demand curve
PTS:
OBJ:
TOP:
7. ANS:
2
DIF: L3
REF: A.89| A.90
4.1.4 Interpret a demand graph using demand schedules.
Demand | Demand Curve
elastic
PTS: 2
DIF: L3
REF: A.97
OBJ: 4.3.1 Explain how to calculate elasticity of demand.
8. ANS: inelastic
TOP: Demand | Elastic
PTS: 2
DIF: L3
REF: A.97
OBJ: 4.3.1 Explain how to calculate elasticity of demand.
9. ANS: elasticity of demand
TOP: Demand | Inelastic
PTS: 2
DIF: L3
REF: A.97
OBJ: 4.3.1 Explain how to calculate elasticity of demand.
1
TOP: Demand | Elasticity of Demand
ID: A
10. ANS: unitary elastic
PTS: 2
DIF: L3
REF: A.98
OBJ: 4.3.1 Explain how to calculate elasticity of demand.
11. ANS: total revenue
TOP: Demand | Unitary Elastic
PTS: 2
DIF: L3
REF: A.103
OBJ: 4.3.3 Explain how firms use elasticity and revenue to make decisions.
TOP: Demand | Total Revenue
MULTIPLE CHOICE
12. ANS: D
The law of demand deals strictly with the effect of price on demand, and indicates that demand will rise
as prices fall.
PTS: 3
DIF: L3
REF: A.85
OBJ: 4.1.1 Explain the law of demand.
KEY: Demand | Law of Demand
13. ANS: C
The law of demand says that when a good’s price is lower, consumers will buy more of it.
PTS: 3
DIF: L3
REF: A.85
OBJ: 4.1.1 Explain the law of demand.
TOP: Demand | Law of Demand
14. ANS: B
The law of demand says that when a good’s price increases, demand for that good will decrease.
PTS: 3
DIF: L3
REF: A.85| A.87 OBJ: 4.1.1 Explain the law of demand.
TOP: Demand | Law of Demand
15. ANS: B
If prices rise and income stays the same, people have less money for the same goods and buy fewer
goods.
PTS: 3
DIF: L3
REF: A.87
OBJ: 4.1.2 Describe how the substitution effect and the income effect influence decisions.
TOP: Demand | Income Effect
16. ANS: C
The substitution effect describes how consumers respond to price changes by substituting less expensive
items for more expensive items.
PTS: 3
DIF: L3
REF: A.87
OBJ: 4.1.2 Describe how the substitution effect and the income effect influence decisions.
TOP: Demand | Substitution Effect
2
ID: A
17. ANS: C
The substitution effect and income effect describe factors that influence consumer’s decisions about what
goods to buy.
PTS: 3
DIF: L3
REF: A.87
OBJ: 4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
curve. TOP:
Demand | Substitution Effect
18. ANS: C
A market demand schedule shows demand at different price points.
PTS: 3
DIF: L3
REF: A.88
OBJ: 4.1.3 Create a demand schedule for an individual and a market.
TOP: Demand | Market Demand Schedule
19. ANS: A
To have demand for a good, consumers must be willing and able to buy it at a specific price.
PTS: 3
DIF: L3
REF: A.88
OBJ: 4.1.2 Describe how the substitution effect and the income effect influence decisions.
TOP: Demand | Concept of Demand
20. ANS: A
The two schedules will use the same set of prices, but the quantity demanded will be larger for the market
demand schedule.
PTS: 5
DIF: L4
REF: A.89
OBJ: 4.1.3 Create a demand schedule for an individual and a market.
TOP: Demand | Market Demand Schedule
21. ANS: C
The prices are listed from lowest to highest in the demand schedule. Because demand is highest at the
lowest price, 50 bagels would be at the top of the list and 0 at the bottom.
PTS: 3
DIF: L3
REF: A.89
OBJ: 4.1.4 Interpret a demand graph using demand schedules.
TOP: Demand | Demand Schedule
22. ANS: D
The demand curve shows changes in the quantity demanded, with price as the only factor. Higher prices
decrease demand.
PTS: 3
DIF: L3
REF: A.89
OBJ: 4.2.1 Explain the difference between a change in quantity demanded and a shift in the demand
curve. TOP:
Demand | Change in Demand
23. ANS: B
A market demand curve predicts how people will change their buying habits as the price of a good
changes.
PTS: 3
DIF: L3
REF: A.90
OBJ: 4.1.4 Interpret a demand graph using demand schedules.
TOP: Demand | Demand Curve Shift
3
ID: A
24. ANS: B
A demand curve is accurate only as long as there are no changes other than the price that could affect
consumer’s decisions. Ceteris paribus means “all other things held constant.”
PTS: 3
DIF: L3
REF: A.91
OBJ: 4.2.1 Explain the difference between a change in quantity demanded and a shift in the demand
curve. TOP:
Demand | Ceteris Paribus
25. ANS: B
When price is the only factor, movement will be along the demand curve. In this case, the movement
would be to the upper left, to a higher price and a lower quantity demanded.
PTS: 3
DIF: L3
REF: A.91| A.92
OBJ: 4.3.1 Explain how to calculate elasticity of demand.
26. ANS: A
The quantity drops by two hundred at each price level.
PTS: 3
DIF: L3
REF: A.92
OBJ: 4.3.2 Identify factors that affect elasticity.
27. ANS: B
Demand for normal goods goes down when income decreases.
TOP: Demand | Change in Demand
TOP: Demand | Demand Curve Shift
PTS: 5
DIF: L4
REF: A.92
OBJ: 4.3.2 Identify factors that affect elasticity.
TOP: Demand | Normal Goods
28. ANS: B
A change in demand that is influenced by changes in consumer tastes shows up as a change in demand at
all prices.
PTS: 5
DIF: L4
REF: A.92
OBJ: 4.1.4 Interpret a demand graph using demand schedules.
TOP: Demand | Change in Demand
29. ANS: C
If a good’s price is expected to go up, people will buy more of it before the price increase.
PTS: 3
DIF: L3
REF: A.94
OBJ: 4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
curve. TOP:
Demand | Effect of Expectations on Demand
30. ANS: D
The effects of changes in price are built into demand curves, so only changes in areas other than price
cause a change or shift in the curve itself.
PTS: 3
DIF: L3
REF: A.94| A.95
OBJ: 4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
curve. TOP:
Demand | Shifts in Demand Curve
4
ID: A
31. ANS: D
Inferior goods are goods that you would buy in smaller quantities, or not at all, if your income were to
rise and you could afford something better.
PTS: 3
DIF: L3
REF: A.94
OBJ: 4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
curve. TOP:
Demand | Inferior Goods
32. ANS: D
Demographics are statistical characteristics of a population such as age, race, gender, occupation, and
income level. Businesses use this information to identify potential customers.
PTS: 3
DIF: L3
REF: A.94
OBJ: 4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
curve. TOP:
Demand | Demographics
33. ANS: D
Advertisers hope to influence the demand for certain goods by making them seem more desirable or
fashionable.
PTS: 3
DIF: L3
REF: A.95
OBJ: 4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
curve. TOP:
Demand | Effect of Advertising on Demand
34. ANS: B
The demand will go down in August because consumers will anticipate a price cut on the current model to
increase demand for the current model so that there will be room on the lot for the new model.
PTS: 5
OBJ: 4.2.3 Give an
good. TOP:
35. ANS: B
Goods used together
PTS:
OBJ:
good.
36. ANS:
Items
DIF: L4
REF: A.95
example of how a change in demand for one good can affect demand for a related
Demand | Consumer Expectations
are bought together, so demand for one increases demand for the other.
3
DIF: L3
REF: A.96
4.2.3 Give an example of how a change in demand for one good can affect demand for a related
TOP:
Demand | Price of Related Goods
B
that are purchased to be used together are complements.
PTS: 3
DIF: L3
REF: A.96
OBJ: 4.2.1 Explain the difference between a change in quantity demanded and a shift in the demand
curve. TOP:
Demand | Complements
37. ANS: B
Elasticity of demand measures how demand will change when prices for a given good or service change.
PTS: 3
DIF: L3
REF: A.97
OBJ: 4.3.1 Explain how to calculate elasticity of demand.
5
TOP: Demand | Elasticity of Demand
ID: A
38. ANS: C
At a high price, a further price increase can greatly reduce demand, making it elastic, while at a low price,
changes have little effect.
PTS: 3
DIF: L3
REF: A.98
OBJ: 4.3.2 Identify factors that affect elasticity.
TOP: Demand | Price Range and Elasticity
39. ANS: D
Elasticity = percentage change in quantity demanded / percentage change in price
PTS:
OBJ:
40. ANS:
If the
3
DIF: L3
REF: A.98
4.3.1 Explain how to calculate elasticity of demand.
TOP: Demand | Elasticity of Demand
B
elasticity of demand for a good at a certain price is less than one, then the demand is inelastic.
PTS: 3
DIF: L3
REF: A.98
OBJ: 4.3.2 Identify factors that affect elasticity.
TOP: Demand | Elasticity of Demand
41. ANS: A
If many substitutes are available, consumers can switch to other goods when prices for a good go up, so
demand is elastic.
PTS: 3
DIF: L3
REF: A.99| A.100
OBJ: 4.3.2 Identify factors that affect elasticity.
TOP: Demand | Elasticity and Substitutes
42. ANS: B
You continue to demand an item whose price has gone up when you consider the item to be essential.
PTS: 3
DIF: L3
REF: A.99
OBJ: 4.1.1 Explain the law of demand.
TOP: Demand | Elasticity
43. ANS: A
The availability of substitutes can make demand for a product elastic.
PTS: 3
DIF: L3
REF: A.99
OBJ: 4.3.2 Identify factors that affect elasticity.
TOP: Demand | Elasticity of Demand
44. ANS: B
Demand for a product may be inelastic if the cost of that item accounts for only a tiny part of the
consumer’s budget.
PTS: 5
DIF: L4
REF: A.100
OBJ: 4.2.3 Give an example of how a change in demand for one good can affect demand for a related
good. TOP:
Demand | Elasticity of Demand
45. ANS: D
People buy the same amount of necessities even when prices rise, but they buy fewer luxuries.
PTS: 3
DIF: L3
REF: A.101
OBJ: 4.3.2 Identify factors that affect elasticity.
TOP: Demand | Necessity vs. Luxury and Elasticity
6
ID: A
46. ANS: D
When prices change, consumers often need time to change their habits.
PTS: 3
DIF: L3
REF: A.101
OBJ: 4.3.3 Explain how firms use elasticity and revenue to make decisions.
TOP: Demand | Elasticity of Demand
47. ANS: B
When demand is elastic, increasing the price lowers total revenue because demand will go down by a larger
percentage than the increase in price.
PTS: 3
DIF: L3
REF: A.103| A.104
OBJ: 4.3.3 Explain how firms use elasticity and revenue to make decisions.
TOP: Demand | Elasticity and Revenue
48. ANS: C
Total revenue is determined by multiplying the price of a good by the quantities sold.
PTS: 3
DIF: L3
REF: A.103
OBJ: 4.3.3 Explain how firms use elasticity and revenue to make decisions.
TOP: Demand | Revenue
49. ANS: B
Knowing whether its products are elastic or inelastic can help a company maximize its total revenue.
PTS: 3
DIF: L3
REF: A.103
OBJ: 4.2.1 Explain the difference between a change in quantity demanded and a shift in the demand
curve. TOP:
Demand | Elasticity of Demand
MATCHING
50. ANS:
OBJ:
51. ANS:
OBJ:
52. ANS:
OBJ:
TOP:
53. ANS:
OBJ:
TOP:
54. ANS:
OBJ:
TOP:
55. ANS:
OBJ:
TOP:
56. ANS:
OBJ:
TOP:
B
PTS: 2
DIF: L3
REF: A.85
4.1.1 Explain the law of demand. TOP: Demand | Law of Demand
A
PTS: 2
DIF: L3
REF: A.85
4.1.1 Explain the law of demand. TOP: Demand | Concept of Demand
C
PTS: 2
DIF: L3
REF: A.87
4.1.2 Describe how the substitution effect and the income effect influence decisions.
Demand | Substitution Effect
D
PTS: 2
DIF: L3
REF: A.87
4.1.2 Describe how the substitution effect and the income effect influence decisions.
Demand | Income Effect
F
PTS: 2
DIF: L3
REF: A.88
4.1.3 Create a demand schedule for an individual and a market.
Demand | Market Demand Schedule
E
PTS: 2
DIF: L3
REF: A.88
4.1.3 Create a demand schedule for an individual and a market.
Demand | Demand Schedule
G
PTS: 2
DIF: L3
REF: A.89
4.1.4 Interpret a demand graph using demand schedules.
Demand | Demand Curve
7
ID: A
57. ANS:
OBJ:
curve.
58. ANS:
OBJ:
curve.
59. ANS:
OBJ:
good.
60. ANS:
OBJ:
good.
61. ANS:
OBJ:
62. ANS:
OBJ:
63. ANS:
OBJ:
64. ANS:
OBJ:
65. ANS:
OBJ:
TOP:
I
PTS: 2
DIF: L3
REF: A.92
4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
TOP:
Demand | Normal Good
J
PTS: 2
DIF: L3
REF: A.94
4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
TOP:
Demand | Inferior Good
M
PTS: 2
DIF: L3
REF: A.96
4.2.3 Give an example of how a change in demand for one good can affect demand for a related
TOP:
Demand | Substitutes
L
PTS: 2
DIF: L3
REF: A.96
4.2.3 Give an example of how a change in demand for one good can affect demand for a related
TOP:
Demand | Complements
P
PTS: 2
DIF: L3
REF: A.97
4.3.1 Explain how to calculate elasticity of demand.
TOP: Demand | Elasticity
N
PTS: 2
DIF: L3
REF: A.97
4.3.1 Explain how to calculate elasticity of demand.
TOP: Demand | Elasticity of Demand
O
PTS: 2
DIF: L3
REF: A.97
4.3.1 Explain how to calculate elasticity of demand.
TOP: Demand | Inelasticity
Q
PTS: 2
DIF: L3
REF: A.98
4.3.1 Explain how to calculate elasticity of demand.
TOP: Demand | Unitary Elastic
R
PTS: 2
DIF: L3
REF: A.103
4.3.3 Explain how firms use elasticity and revenue to make decisions.
Demand | Revenue
SHORT ANSWER
66. ANS:
Possible answer: Demographics refers to statistical characteristics of a population, such as age, race,
gender, occupation, and income level. Consumers with different demographic characteristics may have
different demands for goods. If businesses understand the demographics of their markets, they can adjust
their products or advertising to better appeal to the demand of these markets.
PTS: 7
DIF: L4
REF: A.94
OBJ: 4.2.2 Identify the factors that create changes in demand and that can cause a shift in the demand
curve. TOP:
Demand | Demographics
67. ANS:
The bakeries should expect demand for hot dog buns to fall because hot dogs and buns are complementary
products. In response, they should produce fewer hot dog buns.
PTS: 5
DIF: L3
REF: A.96
OBJ: 4.2.3 Give an example of how a change in demand for one good can affect demand for a related
good. TOP:
Demand | Complements
68. ANS:
The best time to raise prices would be in the spring and early summer.
PTS: 5
DIF: L3
REF: A.103
OBJ: 4.3.3 Explain how firms use elasticity and revenue to make decisions.
TOP: Demand | Elasticity of Demand
8
ID: A
69. ANS:
Electricity and gas are good examples. If these products become more expensive, or if people try to
conserve them, they buy appliances that use less of them. However, they generally do this when their old
appliance wears out (over time) rather than right away.
PTS: 7
DIF: L4
REF: A.103
OBJ: 4.3.3 Explain how firms use elasticity and revenue to make decisions.
TOP: Demand | Elasticity of Demand
9