Ch. 4 Study Guide (2016)
Name: ______Per: _____ Date: ______
Ch. 4 Study Guide (2016)
____1.What determines the price and the quantity produced of most goods?
A. / the consumer’s perception of necessityB. / the interaction of supply and demand
C. / the availability of substitutes for the goods
D. / the quality of the goods that are produced
____2.Which of the following is a good that might not be bought when prices rise?
A. / complement / C. / inferior goodB. / substitute / D. / luxury
____3.Jasmine is willing to buy 40 pencils at 25 cents apiece. When the price is ten cents apiece, she is willing to buy 100 pencils. Which of the following statements could be true about Jasmine’s demand for pencils?
A. / She will buy 80 pencils at 15 cents apiece.B. / She will buy 20 pencils at 20 cents apiece.
C. / She will buy 100 pencils at 5 cents apiece.
D. / None of these statements is likely to be true.
____4.What is a company’s total revenue?
A. / the price of a company’s goodsB. / the amount a company receives for selling its goods
C. / the amount of goods a company can expect to sell
D. / the amount of profit a company can expect to make
____5.What is a basic principle of the law of demand?
A. / The higher the price, the more people will want the good.B. / Everyone has a limited income that they will spend.
C. / When a good’s price is lower, people will buy more of it.
D. / Services are of interest in the same way that goods are.
____6.The price of movie tickets in a town has risen from $7 to $9. What is the most likely effect of the change in price?
A. / The demand curve for movie tickets will move right.B. / The quantity demanded of movie tickets will increase.
C. / The demand curve for movie tickets will move left.
D. / The quantity demanded of movie tickets will decrease.
____7.What kind of system is the United States economy based on?
A. / cause and effect / C. / marketB. / centralized / D. / production
____8.The price of a slice of pizza has just decreased by $1 from an earlier, high price. Based on Ashley’s demand curve in Figure 4.4, which of the following statements is true?
A. / Ashley will buy two more slices of pizza.B. / Ashley will buy four slices of pizza.
C. / Ashley’s quantity demanded is unchanged.
D. / Ashley will not buy any pizza.
____9.A slice of pizza costs $4.00. Based on Ashley’s demand curve in Figure 4.4, what is her quantity demanded of pizza at this price?
A. / oneB. / zero
C. / five
D. / There is not enough information to answer the question.
____10.According to Figure 4.4, at what price will Ashley’s quantity demanded of pizza be three slices?
A. / $ .50 / C. / $1.50B. / $1.00 / D. / $3.00
____11.What shows the quantities of products demanded at each price by all consumers in a market?
A. / an elasticity of demand list / C. / a market pricing listB. / a schedule of consumer prices / D. / a market demand schedule
____12.What does it mean when the demand for a product is inelastic?
A. / People will not buy any of the product when the price goes up.B. / A price increase does not have a significant impact on buying habits.
C. / Customers are sensitive to the price of the product.
D. / There are very few satisfactory substitutes for the product.
____13.How is future price related to current demand?
A. / If the price is expected to rise, current demand will drop.B. / If the price is expected to fall, current demand will rise.
C. / If the price is expected to rise, current demand will rise.
D. / Future price is not related to current demand.
____14.A shift in the demand curve means which of the following?
A. / a change in demand at every priceB. / a rise in prices
C. / a decrease in both price and quantity demanded
D. / a change in consumer income
Matching
Identifying Key Terms
Match each term with the correct statement below.
A. / elasticity of demand / F. / total revenueB. / substitution effect / G. / normal good
C. / law of demand / H. / inferior good
D. / complement / I. / demand curve
E. / substitute / J. / ceteris paribus
____15.a good that replaces another demanded good
____16.the way that a change in price determines whether or not consumers buy goods
____17.a good that consumers will demand more of when their incomes increase
____18.the amount of money a company receives by selling goods or services
____19.what happens when consumers react to an increase in a good’s price by consuming less of that good and more of other goods
____20.a measure of how people change their buying patterns when prices change
____21.a graphic representation of a demand schedule
____22.a good that is always used with another good
Essay
Critical Thinking:
23.Explain fully what it means if demand for a good/service is inelastic. Give an example and explain why.
Ch. 4 Study Guide (2016)
Answer Section
MULTIPLE CHOICE
1.B
2.D
3.A
4.B
5.C
6.D
7.C
8.A
9.B
10.C
11.D
12.B
13.C
14.A
MATCHING
15.E
16.C
17.G
18.F
19.B
20.A
21.I
22.D
1