Economics Chapter 4 Review Game 1. What are the three types of demand elasticity we discussed in Chapter 4?

? elastic inelastic unit or unitary 2. What states that consumers can afford to buy more of a good if its price decreases? the law of demand

PRICE $5 $10

QUANTITY DEMANDED ? 20

3. If the law of demand applies to this good, then ? could be 0 15 20 25 (ANS) 4. What is measured on the vertical axis? Price 5. What happens to quantity demanded by moving left on the horizontal axis? It decreases 6. The law of demand is illustrated by a demand curve that is vertical. horizontal. upward sloping. downward sloping. (ANS) 7. What happens to the quantity demanded of a product when the price of the product falls? Quantity demanded increases

8. Which of the following would not make the demand curve shift? preferences of consumers change price increases (ANS) the income of consumers change the number of consumers in the market changes 9. Good X and Good Y are substitutes. If the price of Good Y increases, then the demand for Good X will decrease. quantity demanded of Good X will decrease. demand for Good X will increase. ANS) quantity demanded of Good X will increase. 10. What is the satisfaction gained from consuming a good? (usefulness) utility 11. An increase in the price of corkboards causes a decrease in the demand for thumb tacks. What can be concluded about the products? They are complements

12. Graph = Movement along the curve

13. What is the amount of money a company receives for selling its goods? (not profit) total revenue 14. Which one of the following can cause a change in demand? a change in consumer tastes (ANS) the substitution effect the income effect. inefficient use of the resources 15. A price increase does not have a significant impact on buying habits when demand is INELASTIC. 16. What effect does an increase in consumer tastes have on the demand curve? It shifts the demand curve to the right

17. GOOD A cost 10 cents. GOOD B cost $1,200. If the price of both goods double, which one has the more elastic demand? GOOD B 18. How do you calculate total revenue? Price multiplied by quantity demanded (or sold) 19. The less substitutes the more inelastic the demand. 20. Which one of the following has an inelastic demand? Televisions Life-saving medication (ANS) Computers Cell phones 21. If you keep buying a product despite an increase in its price, the demand for the product is INELASTIC. 22. When demand is INELASTIC, price and TR move in the same direction. 23. An increase in the price of TOE-TACKS causes an increase in the demand for TOE-TAPE. What can you conclude about the two goods? They are substitutes 24. When demand is ELASTIC, price and TR move in opposite direction. 25. If the price of finger puppets decrease and sales increase, which of the following apply? A change in demand has taken place The demand for finger puppets is inelastic The demand curve shifts to the right A change in quantity demanded has taken place (ANS)

Graph = Shift of curve

27. Gas is a necessity. Steak is a luxury. Which one has an elastic demand? Steak