Download Chapter 4 Worksheet 1

Chapter 4 Worksheet
Section 1
1. How do economists define demand? QC p 83
a. .
2. What tools do economists use to measure demand?
a. .
3. The _______________________an agency of the federal government, aids people who want to go into business.
They conduct workshops where potential business owners learn how to gauge demand & set prices.  p 83
4. The _______________________is a listing that shows the amount demanded at each and every price. The
_______________________shows the same information in the form of a graph. The graph shows that the
demand curve is downward sloping, which means that more will be demanded at lower prices, and less at higher
prices. Why is this true? Cap p 83
a. .
5. How is the common view of demand different from the economist’s view of demand? Review p 84
a. Common view – .
b. Economists’ view – no.
6. What is the relationship between the demand schedule and demand curve?
a. .
7. Explain how your dollars act as “votes” for the products you like best.
a. ..
Section 2
1. What is the relationship between price and quantity demanded? QC 87
a. .
2. How does the income effect explain the change in quantity demanded that takes place when the price
goes down?
a. .
3. The _______________________is a powerful force in our market economy. In a _______________________,
however, central planners choose WHAT is produced and their prices. Most command economies have failed, in
part because they ignore consumer demand.  87
4. The Law of Demand reflects the inverse relationship between _______________________demanded – as price
_______________________, quantity demanded _______________________. VI 86
5. What happens to the demand curve for a product if consumers buy more of it at each & every price?
a. .
6. What is the difference between a change in demand & a change in quantity demanded? QC 89
a. .
b. .
7. Why are butter & margarine considered substitute goods?
a. .
8. Economists classify a few goods as inferior goods. Demand for these goods varies
_______________________with _______________________. People who are laid off may increase their
demand for rice, potatoes, and bologna, even though their income goes _______________________ 89
9. What is the difference between a change in quantity demanded and a change in demand?
a. .
b. .
10. How can the principle of diminishing marginal utility be used to explain the shape of the demand curve?
a. .
b. .
c. .
11. What happens to the price & the quantity of goods or services sold when a store runs a sale?
a. .
12. How do these factors relate to the downward-sloping demand curve?
a. .
Section 3
1. What is elastic demand?
a. .
2. The key to determining demand elasticity is to examine how _______________________ changes as
_______________________ change. If prices & revenues move in _______________________ directions, the
demand curve is _______________________If prices and revenues move in the _______________________
direction, demand is i_______________________. Demand is _______________________if there is no change
in revenue when the price changes. Cap 93
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Chapter 4 Worksheet
3. Why is an understanding of elasticity important for businesses? VI 93
a. .
4. How do economists use the total receipts test to determine whether the demand for a product is elastic or
inelastic? QC 95
a. .
b. .
5. Why is it important for businesses to understand elasticity?
a. .
6. The federal government regulates the price of telephone services because telephone companies have
_______________________ in each market. Without regulation, the companies could charge
______________________________________________. 
7. How are total receipts determined? Review 98
a. .
8. List the three determinants of demand elasticity.
a.
b. .
c. .
9. Is the demand for a boat elastic or inelastic? Why VI 96
a. .
b. .
c. .
10. Why is the demand for insulin inelastic? QC 97
a. .
11. Why is the demand for a product with many substitutes elastic?
a. .
12. Elasticity is a measure of responsiveness. It is the percentage change in the _______________________
variable (quantity) caused by a given percentage change in the _______________________ variable (price).
Extend 96
13. What is the Law of Demand sometimes known as?
a. .
14. What does the downward-sloping demand curve signify?
a. .
15. On a demand curve, what is listed on the vertical axis? On the horizontal axis?
a. Vertical = .
b. Horizontal – .
16. What are the three factors that can cause a change in demand?
a. .
b. .
c. .
17. What factor can cause a change in quantity demanded?
a. .
Review Page 100
Section 1 (pages 82-84)
1. What doe demand mean in economics
a. .
2. What is a demand schedule?
a. List.
b. .
3. What is a demand curve
a. .
b. .
Secion 2 (pages 86-90)
4. Why is the demand curve downward-sloping?
a. .
5. What is the difference between a change in quantity demanded & a change in demand
a. Change in quantity =.
b. Change in demand = .
6. How is the principle of diminishing marginal utility related to the downward-sloping demand curve?
a. ..
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Chapter 4 Worksheet
Section 3 (pages 92-98)
7. What is the difference between elastic demand & inelastic demand?
a. Elastic demand: .
b. Inelastic demand:
8. How can the total receipts test be used to determine demand elasticity?
a. .
9. What are the three determinants of demand elasticity? What are their effects on the demand curve?
a. Can the purchase be delayed?
i. .
ii. .
b. Are adequate substitutes available?
i. .
ii. .
c. Does the purchase use a large portion of income?
i. .
ii. .
Critical Thinking
10. List examples of products that are so important that their use cannot be delayed or postponed.
a. .
b. .
c. .
11. What type of demand elasticity do these products have?
a. .
Applying Economic Concepts
12. How do you think the demand for pizza would be affected by
a. Increase in everyone’s pay =
b. Increase in the cost of gasoline =
c. Decrease in the price of hamburgers =
13. How would you, as a business owner, be likely to change the price of your product if you knew the
demand elasticity of that product?
a. .
.
Bonus Questions:
14. What effect will the following situations have on total receipts? Answers will either be receipts rise or no
effect.
a. Price falls & demand is elastic ______________________________
b. Price rises & demand is inelastic. _____________________________
c. Price rises & demand is unit elastic _____________________________
d. Price rises & demand is elastic _____________________________
e. Price falls & demand is inelastic _____________________________
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