ECONOMICS TEST CHAPTER 4 FALL 2011
True/False
Indicate whether the statement is true or false.
____ 1. A desire to buy a product is the only requirement needed for demand to exist.
____ 2. Marginal utility describes the decreasing satisfaction a consumer receives with the purchase of each additional unit.
____ 3. A demand curve illustrates the quantity demanded at all possible prices at a given time.
____ 4. A demand schedule is created from a demand curve.
____ 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.
____ 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.
Figure 4
Figure 6
Figure 5The two products are
a. | substitutes. | c. | unrelated. |
b. | complements. | d. | demand elastic. |
____ 8. 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. |
____ 9. 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. |
____ 10. 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... |