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Name: _____________________________________________________ Date: ____________________

CHAPTER 4, SECTION 1 QUIZ Sentence Completion For questions 1–5, write the word or phrase that best completes each sentence on the line provided. 1. The numerical representation of the law of demand is called a(n) _____________________________. 2. When buyers are willing and able to purchase different quantities of a good at different prices, it demonstrates their _________________________________ for the item. 3. The _________________________________ of a good will increase or decrease as a result of a price change. 4. A(n) _________________________________ exists in any place where people come together to buy and sell goods or services. 5. The _________________________________ states that as prices increase, the quantity that buyers will purchase will decrease.

True or False Mark statements 6–10 true or false by writing T or F on the line provided. ______ 6. Demand curves do not include straight lines. ______ 7. Demand schedules and demand curves contain the same information presented in different ways. ______ 8. Buyers have demand for a good or service whenever they have enough money to purchase the item. ______ 9. The law of diminishing marginal utility states that consumers value the first unit of a good more highly than an additional unit of the same item. ______10. A demand schedule lists only prices.

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Name: _____________________________________________________ Date: ____________________

CHAPTER 4, SECTION 2 QUIZ Sentence Completion For questions 1–5, write the word or phrase that best completes each sentence on the line provided. 1. A(n) _________________________________ is something for which the demand remains unchanged as income rises or falls. 2. Two goods are _________________________________ if they are consumed together. 3. If demand for a particular good falls as income rises, it is called a(n) _________________________________. 4. A good that can be used in place of another good is called a(n) _________________________________. 5. _________________________________ are those things for which the demand rises as income rises and falls as income falls.

True or False Mark statements 6–10 true or false by writing T or F on the line provided. ______ 6. If the demand for chocolate increases, the demand curve shifts to the left. ______ 7. A shift of the curve and a movement along the curve are the same. ______ 8. Price is the only factor that causes a change in quantity demanded. ______ 9. Popcorn and butter would be classified as complementary goods. ______10. A shift of the curve means that the curve moves either right or left.

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Name: _____________________________________________________ Date: ____________________

CHAPTER 4, SECTION 3 QUIZ Sentence Completion For questions 1–5, write the word or phrase that best completes each sentence on the line provided. 1. _________________________________ exists when the percentage change in quantity demanded is less than the percentage change in price. 2. The concept of demand that deals with the relationship between price and quantity demanded is called _________________________________. 3. A(n) _________________________________ is considered a reasonable replacement for something. 4. When buyers will purchase the same amount of a good, even though the price has increased, the demand for that item is _________________________________. 5. Demand is _________________________________ when the percentage change in quantity demanded is the same as the percentage change in price.

True or False Mark statements 6–10 true or false by writing T or F on the line provided. ______ 6. In the elasticity equation, the numerator is percentage change in quantity demanded. ______ 7. If movie prices increase by 30 percent and attendance (quantity of tickets demanded) drops by 40 percent, demand is considered inelastic. ______ 8. Time is one of the factors that determine elasticity of demand. ______ 9. Buyers are more responsive to price changes for goods on which they spend a larger percentage of their income. ______10. If demand is inelastic and price decreases, total revenue will decrease.

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Name: _____________________________________________________ Date: ____________________

CHAPTER 4, TEST A True or False Mark statements 1–30 true or false by writing T or F on the line provided. ______ 1. A demand curve is a graph that may contain a straight line that slopes downward from left to right. ______ 2. If demand for VCRs decreases, the curve would shift to the left. ______ 3. Price is the only factor that can cause a change in quantity demanded. ______ 4. Elasticity of demand deals with the relationship between price and quantity demanded. ______ 5. Elasticity is really measuring consumer response to a price change. ______ 6. Price has no impact on how much consumers will buy. ______ 7. One of the most important factors in determining whether or not the demand for a product is elastic is whether or not substitutes for it exist. ______ 8. Insulin and heart medicine are examples of inelastic goods. ______ 9. Chocolate bars, tropical vacations, and automobiles are all elastic goods. ______10. The law of demand states that consumers will buy more of a product at lower prices. ______11. If a good has many substitutes, it can be considered inelastic. ______12. The law of demand states that as prices rise, the quantity demanded rises also. ______13. Economists state that the more utility you receive from an item, the higher price you are willing to pay for it. ______14. If you eat six slices of pizza, you are likely to get the same satisfaction from the last piece as you enjoyed with the first piece. ______15. Demand and quantity demanded are basically the same. ______16. A demand schedule is a list of prices and the quantities demanded at each price. ______17. Demand curves slope upward from left to right. ______18. Whenever demand for a good changes, the demand curve for that good shifts to the right or the left. ______19. As income rises, demand for normal goods rises.

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______20. Leading experts in the field of economics can predict with certainty when an economic event will occur. ______21. One critical determinant of elasticity is whether or not substitutes exist. ______22. In the elasticity equation, the percentage change in price is always on the top over the percentage change in the quantity demanded. ______23. If a seller increases the price of a good, it will always bring about an increase in total revenue. ______24. Elasticity of demand is important to economists only; business owners don’t need to understand advanced economic concepts like elasticity. ______25. Quantity demanded is determined by price. ______26. One factor that determines demand is people’s preference. ______27. Pepsi and Coke can be considered substitutes. ______28. Future price has no relationship to current demand. ______29. A movement along the demand curve to a different point illustrates price change on a graph. ______30. Inelastic demand is usually associated with demand for luxuries.

Multiple Choice For questions 31–40, write the letter of the best choice on the line provided. ______31. The prices consumers pay are determined by

______34. Demand curves a. slope upward from left to right.

a. chance.

b. slope downward from left to right.

b. producers.

c. show a positive relationship.

c. markets.

d. slope downward from right to left.

d. advertising. ______35. Which of the following could increase demand for a good?

______32. A market is any place a. where buyers and sellers meet.

a. higher birthrate

b. where only sellers offer goods for sale.

b. increased immigration

c. with a sign designating a store.

d. All of the above

c. higher prices in the future

d. where fruits and vegetables are sold. ______36. A shift of the demand curve represents ______33. In economics, demand means

a. a movement on the demand curve.

a. willingness and desire to buy a good.

b. a change in the quantity demanded.

b. willingness and ability to buy a good.

c. a change in demand.

c. ability to buy a good.

d. All of the above

d. willingness to buy a good. 8

CHAPTER 4, TEST A

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______37. Who determines whether a good is normal or inferior? a. individuals

______39. What will happen in the car market if consumers expect higher prices in the near future?

b. sellers

a. The demand for cars will decrease.

c. government

b. The demand for cars will increase.

d. All of the above

c. The supply of cars will drop. d. The demand for cars will not change.

______38. If demand for a good is elastic and its price decreases, total revenue

______40. If the number of buyers in the market increases, which of the following will happen?

a. goes up. b. goes down. c. remains the same. d. cannot be predicted.

a. The supply in the market will increase. b. The demand in the market will decrease. c. The demand in the market will increase. d. The supply in the market will decrease.

Short Essay Write answers to essay questions 41 and 42 on the lines provided. 41. Illustrate the law of demand in words, in symbols, and as a graph.

Law of Demand

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42. Discuss the five factors that cause demand curves to shift and give a specific example of each one.

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Name: _____________________________________________________ Date: ____________________

CHAPTER 4, TEST B True or False Mark statements 1–26 true or false by writing T or F on the line provided. ______ 1. In the elasticity equation, the numerator is the percentage change in price. ______ 2. When calculating elasticity of demand, if demand is less than 1 it is considered inelastic. ______ 3. In measuring elasticity, if the quantity demanded changes by the same percentage as price it is considered unit-elastic demand. ______ 4. If the quantity demanded changes by the same percentage as price, it is considered inelastic demand. ______ 5. Consumers are price-sensitive to all products; therefore, all products are elastic. ______ 6. If salt prices increase 50 percent and the quantity demanded drops 25 percent, we know that salt is an elastic good. ______ 7. If DVD prices drop by 30 percent and the quantity demanded increases 60 percent, demand is inelastic. ______ 8. There is an inverse relationship between price and quantity demanded, according to the law of demand. ______ 9. According to economists, as a person consumes additional units of a good, satisfaction from each additional unit decreases. ______10. Price and quantity demanded move in opposite directions according to the law of demand. ______11. Physical fitness centers (gyms) are not using economic thinking when they offer new enrollees two memberships for the price of one. ______12. Demand schedules demonstrate that as price decreases, quantity demanded always decreases as well. ______13. Individual demand curves and market demand curves are different. ______14. If demand shifts to the right, it means that buyers want to buy more of the good at each and every price. ______15. Economists refer to damaged goods as inferior goods. ______16. Neutral goods are those goods that have gone on sale. ______17. Economists, rather than consumers, determine which goods are normal or inferior.

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______18. When the demand for one good moves in the same direction as the price of another good, the two are complements. ______19. Price change is shown on a graph by a shift of the curve to the left. ______20. Unit-elastic demand exists when the quantity demanded changes by the same percentage as price, and elasticity equals 1. ______21. Buyers are less responsive to price changes for goods on which they spend a smaller percentage of their income. ______22. The less time you have to respond to a price change in a good, the more likely it is that your demand for the good is going to be inelastic. ______23. Because of the relationship between elasticity and total revenue, most sellers would prefer to sell elastic goods. ______24. If demand is elastic and the price is decreased, total revenue will increase. ______25. If you sell a product for which the demand is inelastic and you reduce the price, your total revenue will decrease. ______26. Due to elasticity of demand, a sold-out concert guarantees that total revenue is maximized.

Multiple Choice For questions 27–40, write the letter of the best choice on the line provided. ______27. The law of demand can be represented a. in picture form as a graph.

______30. If the demand curve shifts to the left, it means

b. in words.

a. sellers will produce less.

c. as a schedule listing prices and quantities demanded.

b. buyers want to buy less.

d. All of the above

d. there is more of the product.

c. there is less of the product.

______28. Market demand represents a. all individual demand curves added together.

______31. Which of the following will not change the demand for a product? a. a change in the price of a substitute

b. all the producers in the market.

b. a change in income

c. all buyers and sellers in the market.

c. a change in expectations about the future price of the product

d. All of the above

d. a change in the price of the product ______29. If the demand for computers increases, the demand curve will a. go up. b. go down. c. shift to the left. d. shift to the right. 12

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______32. A normal good a. has not been damaged.

______36. A change in quantity demanded can be caused by

b. will be purchased, regardless of changes in income.

a. income.

c. will be in higher demand if a person’s income increases.

c. price.

d. will be in higher demand if a person’s income decreases.

b. preferences. d. price of a substitute. ______37. On a demand curve, a change in quantity demanded is represented by

______33. When goods are substitutes, which of the following occurs?

a. a shift to the left. b. a shift to the right.

a. The demand for one good moves in the opposite direction as the price of the other good. b. The demand for one good moves in the same direction as the price of the other good.

c. a movement along the curve. d. All of the above ______38. The demand for necessities like milk, electricity, and water is usually

c. The demand for one good does not affect the price of the other.

a. elastic.

d. The supply of one good moves in the opposite direction as the price of the other good.

c. unit-elastic.

______34. If there are few or no substitutes for a good, then which of the following is true?

b. inelastic. d. None of the above ______39. Elasticity of demand measures a. how much buyers respond to a change in income. b. how much sellers respond to a change in price.

a. The demand would not change. b. The supply would be elastic.

c. how much buyers respond to a change in price.

c. The demand would be elastic. d. The demand would be inelastic. ______35. With complementary goods, which of the following occurs? a. The demand for one good moves in the opposite direction as the price of the other good.

d. how much sellers respond to a change in income. ______40. If a decrease in income increases the demand for a good, the good is

b. The demand for one good moves in the same direction as the price of the other good.

a. inferior. b. normal. c. a complement. d. a substitute.

c. The demand for one good does not affect the price of the other. d. The supply of one good moves in the opposite direction as the price of the other good.

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Short Essay Write answers to essay questions 41 and 42 on the lines provided. 41. Explain the difference between demand and quantity demanded, and list the factor or factors that affect each one.

42. Define elasticity of demand and describe how it is calculated; give examples of elastic and inelastic goods.

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