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Throck Eco Ch 7

Throck Eco ch 7

QuestionAnswer
What is demand? the amount of a good or service that consumers are able and willing to buy at various prices during a specified time
What is supply? the amount of goods or services that producers are able and willing to sell at various prices during a specified time
What is a market? the process of freely exchanging goods and services between buyers and sellers.
What is voluntary exchange? basis of a market eco: a transaction in which a buyer and a seller exercise thier economic freedom by workoung out thier own terms of exchange
What is the law of demand? economic rule stating that the quanity demanded andprice move in opposite directions
What is quantity demanded? the amount of a good that a consumer is willing and able to purchase at a specific price
What is the real income effect? economic rule stating that individuals cannot keep buying the same quanity of a product if its price rises while thier income stays the same
What is the substitution effect? economic rule stating that if two items satisfy the same need and the price of one rises, people will buy the other
What is utility? the ability of any good or service to satisfy comsumer wants
What is marginal utility? an additional amount of satisfaction you get from buying more of a product
What is the law of diminishing utility? rule stating that the additional satisfaction a consumer gets from purchasing one more unit of a product will lessen with each additional unit purchased
What is the demand schedule? table showing quantities demanded at different possible prices
What is the demand curve? downward sloping line that shows in graph form the quantities demanded at each possible price
What is a complementary good? A product that relates well with another product; products that go together
What is elasticity? An idea dealing with a person's response to the increase or decrease in the price of a product
What is price elasticity of demand? Deals with how much demand for products varies according to the change in prices
What is elastic demand? the situation in which the rise or fall in prices greatly affects the amount that people are willing to buy
What is inelastic demand? situation in which a product's price change has little impact on the quantity demanded.
If your income increases, what will happen to the quantity demanded of normal goods? quantity demanded will increase
If your income decreases, what will happen to the quantity demanded for inferior goods? quantity demandedwill increase
If the price of DVDs increase, what will happen to the quantity demanded for blue ray discs? the quantity demanded will increase
If the price of blue ray discs decrease, what will happen to the quantity demanded for dvds? quantity demanded will decrease
If the cost of ipods increase, what will happen to the quantity demanded for headphones? quantity demanded will decrease
If the cost of mechanical pencils decrease, what will happen to the quantity demanded for lead refills? quantity demanded will increase
Brittany, a popular girl at school, starts to wear leg warmers on her arms. What will happen to the quantity demanded for leg warmers? quantity demanded will increase
If the price of stock in Wal Mart is expected to increase, what will happend to the current demand for the stock? it will increase
If gas prices are expected to fall tomorrow, what will happen to current demand? it will decrease
is the demand for brands of cheese elastic or inelastic? elastic- demand will change with price
True or false: if salt goes on sale, demand will increase. False- this is an inelastic item because the price really doesn't affect demand
Name the law: The price of Dr. Peppers continue to rise and Connor can no longer afford to buy 3 a day. She now can only buy 1. real income effect
Name the law: Valerie bought red flip flops at Old Navy for $7. Then she buys a pair in green. She then decides that she will not buy any more flips flops for $7 because she would rather buy a shirt. She will however buy more when the shoes go on sale. law of diminishing marginal utility
Created by: davislauren