Supply and Demand Quiz

A curve showing the relationship between the price of a good and the quantity demanded at that price. Lower prices generally lead to higher demand.

A situation where people buy more of a good when its price decreases. Example: Buying lots of items during a sale.

Goods or services for which there are few alternatives. For example, jet fuel is a high-value use for oil because there are limited substitutes.

Goods or services for which there are many alternatives. For example, gasoline or plastic are low-value uses for oil because there are numerous substitutes.

The quantity of a good people are willing to purchase at a given price. Usually, higher demand occurs at lower prices.

The price at which a good is sold in a market. This can be affected by supply and demand forces.

The total amount of a good that is available for purchase in a market. This is influenced by factors like production and availability.

The concept that explains how the price of a good is determined by the interaction of the forces of supply and demand.

The responsiveness of demand to changes in price. It measures how much the quantity demanded changes for each percentage point change in price.

Demand is perfectly inelastic when the quantity demanded does not change at all, regardless of the price change. The demand curve appears as a vertical line.

Demand is inelastic when the quantity demanded changes less than proportionally to a price change, meaning the demand curve is relatively flat.

Demand is unitary elastic when the quantity demanded changes proportionally to a price change. This means a 10% price increase leads to a 10% decrease in quantity demanded.

Demand is elastic when the quantity demanded changes more than proportionally to a price change, meaning the demand curve is relatively steep.

A good for which demand increases as income decreases.

A good for which demand decreases as income decreases.

The change in demand caused by a change in income.

The impact of a price change on demand, keeping all other factors constant.

The sensitivity of demand to price changes. It measures how much quantity demanded changes in response to a price change.

The percentage change in quantity demanded divided by the percentage change in price.

The point where a change in price leads to an equal percentage change in quantity demanded.

The relationship between price and quantity demanded where higher prices lead to lower quantities demanded.

The total revenue a business generates from selling its products.

The value of elasticity that indicates consumers are very responsive to price changes.

The value of elasticity that indicates consumers are not very responsive to price changes.

The practice of offering a discounted price to a specific group of customers.

The situation of price and quantity changes that lead to an increase in total revenue.

The situation where a price increase leads to a decrease in total revenue.

The situation where a price decrease leads to an increase in total revenue.

A measure of how much consumers respond to changes in a product's price, expressed as a negative number.

The change in a good's demand due to a factor other than price, causing the entire demand curve to shift. Examples include a change in income, consumer preferences, or prices of related goods.

A shift in the demand curve to the right, indicating an increase in demand for that good.

A shift in the demand curve to the left, indicating a decrease in demand for that good.

The price at which a buyer is indifferent between buying or not buying a good.

Goods that are used together. For example, gasoline and cars. If the price of gasoline increases, the demand for cars might decrease.

Goods that can be used in place of each other. For example, tea and coffee. If the price of tea increases, the demand for coffee might increase.

The willingness to pay for a product or service, determined by the value a consumer places on it.

A change in the quantity demanded of a good in response to a change in its own price. This reflects the movement along the existing demand curve.

The number of close substitutes available in the market. More substitutes means consumers can easily switch to alternatives if the price of a product increases, making demand more elastic.

The proportion of a consumer's income spent on a product. Products that take up a larger portion of income tend to have more elastic demand because consumers are more sensitive to price changes.

The cost involved in switching between different products. Products where switching is expensive tend to have less elastic demand because consumers are less likely to switch, even if the price increases.

The tendency of consumers to stick with a particular brand or product due to habit or preference. Brand loyalty leads to less elastic demand, as consumers are less price-sensitive.

The extent to which a product is considered a necessity or a luxury. Necessities tend to have less elastic demand because people need them regardless of price. Luxuries tend to have more elastic demand.

Total revenue is the total amount of money a business earns from selling its products. It is calculated by multiplying the price per unit by the quantity sold.

The relationship between price elasticity of demand and total revenue. When demand is elastic, a price decrease leads to an increase in total revenue. When demand is inelastic, a price decrease leads to a decrease in total revenue.

A pricing strategy where a business charges different prices for the same product to different customers. This is often used to take advantage of different demand elasticities among customers.

A form of dynamic pricing used by companies like Uber, where prices fluctuate based on demand. Prices tend to go up during peak times when demand is high.

The price elasticity of demand can be estimated but not always perfectly known. The elasticity of demand can also vary widely by region, time period, and product variations.

The situation where the percentage change in quantity demanded is equal to the percentage change in price. The absolute value of the elasticity of demand is equal to 1. This means that total revenue stays the same even when the price changes.

In the case of inelastic demand, a price increase will lead to an increase in total revenue. This is because the increase in price outweighs the decrease in quantity demanded.

In the case of elastic demand, a price decrease will lead to an increase in total revenue. This is because the increase in quantity demanded outweighs the decrease in price.

The sensitivity of youth smokers to price changes is likely to be higher than that of adult smokers. This is because youth smokers may have less disposable income and are less addicted to nicotine.

The addictive nature of nicotine makes it likely that adult smokers will be less sensitive to price changes. They are more entrenched in their habit and may be willing to pay higher prices to continue smoking.

The tendency of individuals to consume the same amount of electricity despite price changes indicates that demand for electricity is inelastic. This is likely due to limited substitutes and the essential nature of electricity.

The responsiveness of airline ticket buyers to price changes indicates that demand for airline tickets is elastic. This is likely due to the availability of substitutes (for example, traveling by car or train).