A- Substitutes B. Consumer Tastes C. Complements 4 Ratios

Chapter 4- Review

Name______

1.  If the price of milk increases then the demand for cereal decreases this is because the two items are:

A- substitutes B. Consumer tastes C. Complements 4 ratios

2. The Law of Demand means that:

A.  Consumers will buy more of a product at lower prices and less at higher prices

B.  Consumers will only buy products that they need.

C.  Consumers will only buy products made in the USA

D.  Consumers will buy products that they demand.

3. Microeconomics is the part of economics that study:

A.  Science trends in the United States.

B.  Computers and software for MIcroSoft.

C.  Small units, such as individuals and firms

D.  Small particles of matter used in industry.

4. Demand needs to meet three conditions:

A.  Desire, hope and ability to buy a product

B.  Ability, enjoyment and money to buy a product

C.  Willingness, enjoyment and currency to buy a product

D.  Desire, ability and willingness to buy a product.

5. Marginal utility is when…..

A.  A consumer has additional satisfaction or usefulness form having one more unit of the product.

B.  A consumer has additional satisfaction when the item is on sale.

C.  . A consumer receives the product for free.

D.  A consumer is the first person to purchase the unit.

6.Diminishing marginal utility is when….

A.  The item is on sale.

B.  The item is only useful to one person

C.  It is a decrease in satisfaction or usefulness from having one more item of the same product.

D.  The item is very expensive.

7. The idea of eating a dozen doughnuts, when you don’t want to eat more than three doughnuts is the concept of….

A.  Doughnut depression demand

B.  Marginal Utility

C.  Substitution effect

D.  Diminishing marginal utility

8. When the price of an item drops and that causes the demand for an item to increase this is called….

A.  Substitution Effect

B.  Income effect

C. Consumer income

D.Consumer tastes

9.These items are inelastic….

A.  Medicine , Gasoline, Drinking Water

B.  Gasoline, I-Phone, Michael Kors purse

C.  Medicine , Tennis shoe, backpack

D.  Drinking water, concert ticket, diamond ring

10 What makes the demand for a specific item elastic or inelastic?

A.  Can the purchase be delayed, are substitutes available, does the purchase use a large portion of income.

B.  Are substitutes available, does the item have complements, how many consumers are there.

C.  Can the purchase be delayed, does the purchase make the consumer happy, are substitutes available.

D.  Does the purchase use a large portion of income,does the item have complements,are substitutes available?