ECN 104 Chapter 3: Chapter 3

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salmoncat720

13 Jun 2011

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3. 1 demand: demand: a schedule/curve that shows the various amounts of product consumers are willing & able to purchase at each of a series of possible prices, during some specified period of time. Mac will yield less satisfaction to consumer than the 1st, and 3rd still less than 2nd) Income effect: change in price of product changes a consumer"s real income (purchasing power) and thus quantity of the product purchased. Factors other than price that determine the quantities of a good/service. Increase # of buyers in market increase in product demand: decrease # of buyers in market decrease in product demand. Substitute goods: products/services that can be used in place of each other. Price increase of a increase demand for b. Price decrease of a decrease demand for b: complementary goods: products/services that are used together. Price increase of a decrease demand for b. Lower future income decrease in current demand.

Related Questions

1. If marginal utility is negative, total utility is

a. Positive

b. Negative

c. Decreasing

d. Constant

e. Increasing

2. If utility-maximizing consumers face identical prices, they will have identical

a. Marginal utilities for each good

b. Ratio of marginal utilities for each good

c. Preferences

d. Ratios of total utilities for each good

e. Total utilities for each good

3. The substitution effect

a. Always increases quantity demanded of a good whose relative price has fallen

b. Is opposite in sign to the income effect for all normal goods

c. Is opposite in sign to the income effect for all normal goods

d. May cause demand curves to be upward sloping

e. Is always dominated by the income effect for normal goods

4. Demand curves for normal goods slope downward because

a. The substitution effect of a price change is greater than the income effect

b. Substitution and income effects work in the same direction

c. The income effect is always greater than the substitution effect

d. The income effect is always less than the substitution effect

e. None of the above

5. The idea that a consumer derives less additional satisfaction from consuming successive units of a good is called

a. Diminishing consumer surplus

b. The paradox of value

c. Diminishing marginal utility

d. Diminishing total value of consumption

e. Diminishing total utility

indigolocust149

budget line

marginal utility

complete property of preferences

market demand

consumption bundle

substitution effect

Giffen good

total effect

income effect

transitive property of preferences

indifference curves

utility

the marginal rate of substitution

utility function

1.	_____	The satisfaction or benefit that consumers receive from consuming goods or services.
2.	________________ _	A particular combination of specific quantities of goods or services
3.	________________ _	Consumers can rank all conceivable bundles of goods or services
4.	_____	If A is preferred to B, and B is preferred to C, then A is always preferred to C.
5.	_____	Equation showing a consumerâs perception of the total utility forthcoming from consuming each bundle of goods and services.
6.	_____	A set of consumption bundles each and every one of which provides a consumer with exactly the same level of total utility.
7.	_____	The number of units of Y that must be given up for total utility to remain the same when one more unit of X is consumed.
8.	_____	The addition to total utility attributable to consuming one more unit of a good, holding the consumption of all other goods constant.
9.	_____	The line showing all bundles of goods that can be purchased at given prices if the entire income is spent.
10.	_____	The change in the consumption of a good that would result if the consumer remained on the original indifference curve after the price of the good changes.
11.	_____	The change in consumption of goods results strictly from the change in purchasing power after the price of a good changes.
12.	________________ _	The sum of the substitution and income effects.
13.	_____	A good for which quantity demanded varies directly with price, causing an upward sloping demand curve.
14.	_____	A list of prices and the corresponding quantity consumers are willing and able to purchase at each price.

blushwildebeest943

Which of the following describes the substitution effect of a price change?

a. The change in demand that results from a change in price, making the good more or less expensive relative to other goods, holding constant the effect of a price change on consumer purchasing power.

b. The change in quantity demanded of a good that results from the effect of a change in price on consumer purchasing power, holding everything else constant.

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ECN 104 Chapter 3: Chapter 3

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