Name: ________________________ Class: ___________________ Date: __________
ID: A
Chapter 4 Test
True/False
Indicate whether the statement is true or false.
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1. A desire to buy a product is the only requirement needed for demand to exist.
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2. Marginal utility describes the decreasing satisfaction a consumer receives with the purchase of each additional
unit.
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3. A demand curve illustrates the quantity demanded at all possible prices at a given time.
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4. A demand schedule is created from a demand curve.
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5. The Law of Demand states that more of a product will be purchased at low prices than at high ones.
Multiple Choice
Identify the choice that best completes the statement or answers the question.
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6. For most products and services, increased price results in
a. demand for fewer products.
c. reduced demand for substitutes.
b. demand for more products.
d. increased demand for complements.
7. An increase in the price of milk causes a decrease in the demand for cereal. The two products are
a. substitutes.
c. unrelated.
b. complements.
d. demand elastic.
8. Advertising, fashion trends, and new product introductions serve to
a. create consumer needs.
c. create consumer demand.
b. increase income effectiveness.
d. minimize the income effect.
9. Because a modest price increase has little or no effect, the demand for the product is
a. complementary.
c. elastic.
b. inelastic.
d. unit elastic.
10. A business doubled the price of a product in order to increase profits. Which of the following scenarios might
have occurred?
a. A sharp increase in revenues demonstrated the elasticity of the product.
b. A small increase in revenues demonstrated the unit elasticity of the product.
c. A dramatic decline in revenues demonstrated the elasticity of the product.
d. A dramatic decline in revenues demonstrated the inelasticity of the product.
11. A demand schedule shows
a. an upward-sloping curve that illustrates the positive relationship between price and
quantity demanded.
b. a listing of the various quantities demanded of a particular product at all prices that might
prevail in the market.
c. the fluctuations in demand that occurred over a specified period of time.
d. the fluctuations in demand scheduled to occur over the following year.
12. Consumers' willingness to replace a costly item with a less costly item is an example of
a. the substitution effect.
c. demand elasticity.
b. the income effect.
d. complements.
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Name: ________________________
ID: A
____ 13. An increase in the price of cameras results in a decrease in the demand for film. The two products are
a. substitutes.
c. unrelated.
b. demand elastic.
d. complements.
____ 14. When a customer's need for a product is not urgent, demand tends to be
a. inelastic.
c. complementary.
b. elastic.
d. unit elastic.
____ 15. When a manufacturer of pain medication reduced the price of the medication by 30%, profits declined by
almost exactly 30%. Demand for the product is
a. inelastic.
c. unit elastic.
b. elastic.
d. complementary.
____ 16.
Demand Schedule for CDs
Quantity Demanded
(in millions)
1,100
900
700
500
300
100
Price per CD
$10
$12
$14
$16
$18
$20
a.
b.
c.
d.
If you were to graph this demand schedule, the demand curve would
slope upward from left to right.
slope downward from left to right.
be horizontal.
be vertical.
2
Name: ________________________
____ 17.
ID: A
According to this demand curve, if the price of movie videos increases from $14 to $16, the quantity
demanded will
a. fall from 600 to 400.
c. fall from 400 to 200.
b. rise from 400 to 600.
d. rise from 200 to 400.
____ 18.
a.
b.
c.
d.
Which of the following choices could cause the movement shown in the graph?
a decrease in income
an increase in population
a decrease in the price of a substitute
an increase in the price of a complement
3
Name: ________________________
ID: A
____ 19.
a.
b.
c.
d.
Which of the following choices could cause the movement shown in this graph?
a decrease in income.
an increase in population
an increase in the price of a substitute
a decrease in the price of a complement
a.
b.
The movement in the graph shows that the quantity demanded of butter decreased because the
price of butter increased.
c. price of margarine increased.
price of margarine decreased.
d. price of butter decreased.
____ 20.
4
Name: ________________________
ID: A
____ 21.
a.
b.
Which of the following choices could cause the movement shown in this graph?
an increase in the price of film
c. an increase in the price of cameras
a decrease in the price of film
d. a decrease in the price of cameras
a.
b.
c.
d.
What does the movement shown on this graph represent?
a change in demand
the inverse relationship between price and quantity demanded
the inverse relationship between price and marginal utility
diminishing marginal utility
____ 22.
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Name: ________________________
ID: A
____ 23.
Quantity Demanded
Price
$80
70
60
50
40
30
a.
b.
c.
d.
Old Demand
Curve
0
2
4
7
12
15
New Demand
Curve
1
5
8
10
15
22
The change from the old demand curve to the new demand curve shown in the table represents a
movement upward along the demand curve.
movement downward along the demand curve.
shift of the demand curve to the left.
shift of the demand curve to the right.
Matching
Match each statement with the correct item below.
a. measure of responsiveness that shows how a dependent variable responds to a change in
an independent variable
b. field of economics that deals with behavior and decision making by small units
c. describes change in demand when a change in price causes a relatively larger change in
quantity demanded
d. extra usefulness gained from using one more unit of a product
e. movement along the demand curve
f. desire, ability, and willingness to buy a product
g. products used in place of other products
h. change in quantity demanded due to a change in relative price
i. listing that shows quantities demanded of a product at all prices
j. given change in price that causes a proportional change in quantity demanded
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24.
25.
26.
27.
28.
demand
marginal utility
demand schedule
elasticity
microeconomics
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