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Demand Review II

Demand Review II. What is defined as the desire, willingness, and ability to purchase a particular product at a particular price? Demand. What law states that at a certain point, the next unit of a product ads less benefit than the unit before? Law of Diminishing Marginal Utility.

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Demand Review II

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  1. Demand Review II

  2. What is defined as the desire, willingness, and ability to purchase a particular product at a particular price? • Demand

  3. What law states that at a certain point, the next unit of a product ads less benefit than the unit before? • Law of Diminishing Marginal Utility

  4. When price increases, what says that the quantities of the product demanded will decrease? • Law of Demand

  5. Create a demand curve showing the Law of Demand: P D Q

  6. Create a demand curve showing the income effect: P D Q

  7. Which of the following does NOT reflect the Law of Demand? • Income effect • Substitution effect • Law of Diminishing Marginal Utility • A change in consumer income • A sale • #4

  8. What is the economic relationship of a hotdog and hamburger? • Substitutes

  9. What is the relationship between mustard and ketchup? • Complements

  10. What is the phrase that refers to the added benefit to consuming one more unit of a product? • Marginal utility

  11. What happens to the demand for orange juice when the price of lemon aid falls? D2 D1

  12. What happens to the demand for a product when the price of its complement decreases? • Increases • Shifts to the right

  13. What happens to the demand for a product when the price of its substitute falls? • Decreases • Shifts to the left

  14. Create a demand curve demonstrating what happens to the demand for Honda cars when the safety of Toyotas becomes doubtful:

  15. What is the economic relationship between an IPod and earphones? • Complements

  16. What happens to the demand for earphones when the price of IPods increases? • Decreases • Shifts to the left

  17. What happens to the demand for Prom dresses the week before a big price increase? • Decreases • Shifts to the left

  18. Demand curve for glasses when contact lenses go on sale: D2 D1

  19. What do consumers do when price is higher than the product’s marginal utility? • Stop buying the product

  20. Which is NOT a factor that causes a change in demand (as opposed to a change in the quantities demanded)? • Change in income • Change in tastes or preferences • Change in number of consumers (population) • Change in the price of the item • #4

  21. What is the relationship between an electric fan and an air conditioning unit? • Substitutes

  22. What answers the following question? • When price changes, how much do quantities demanded change? • Elasticity • Price elasticity • Elasticity of demand

  23. What are the 3 determinants of demand elasticity? • Urgency/need • Availability of adequate substitutes • The proportion of income required to purchase the product

  24. What is the likely elasticity of demand of a product that has adequate substitutes? • Elastic

  25. When a product is urgent without adequate substitutes, the price elasticity is likely: • Inelastic

  26. When a change in price causes a proportional change in quantities demanded, the elasticity is: • Unit elastic

  27. When price changes cause relatively larger changes in quantities demanded, the elasticity of demand is: • Elastic

  28. Create a demand curve that shows inelastic demand:

  29. Whoo Hoo! Econ is Fun!...

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