Txst Econ 2314 - Exam with 100% correct solutions 2024

Law of Demand correct answers Holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of a product rises, the quantity demanded of the product will decrease. The Law of demand tells us the ________ but not the ______ correct answers Direction, size How do you quantify the price sensitivity? correct answers Percentage change in price If a small percentage increase in price is associated with a large percentage decrease in quantity demanded, we call it an ______ demand correct answers elastic If no matter how the price is changing, quantity does not respond that much, then we call it an ________ demand correct answers inelastic Demand is ___________ to price fluctuations correct answers insensitive Elasticity is always __________. correct answers non-positive What factors would affect the price of elasticity of demand? correct answers 1. Availability of close substitutes 2. How the market is defined 3. Whether the good is a necessity Law of demand: Things being held constant correct answers 1. Preferences/Tastes 2. Income and wealth 3. Government policies 4. Expectations of future prices/availability of goods/services If the consumption of a good increases then we call this good a __________ good correct answers normal If the consumption decreases (people consume less), we call it an _________ good. correct answers inferior Goods that should be used together correct answers Complements Factors that cause the demand curve to shift correct answers 1. Preferences 2. Income and wealth 3. Prices of substitutes/complement change 4. Number of consumers changes 5. Expectation future prices changes