Question

1. which of these names the only thing that can cause movement along a demand curve? a. substitution b. unit elastic demand c. diminishing satisfaction d. a change in price
2. which term refers to a changing price that causes a proportional change in total revenue? a. elastic b. unit elastic c. inelastic d. total expenditures

quantity of burritos demanded by all consumers in the market

price	consumer p	consumer q	consumer r
$6	1	2	1
$5	2	3	3
$4	4	5	5
$3	6	6	8
$2	8	10	10

1. based on the table, at what price would the market demand for burritos be 14? a. $4 b. $3 c. $6 d. $5
2. what is the satisfaction or usefulness obtained by a consumer from acquiring one more unit of a product? a. income effect b. marginal utility c. utility d. substitution effect

short answer

1. provide a real life example of the law of demand. be specific.
2. consider the term marginal utility. what is best synonym for marginal?
3. read the newspaper headline below and answer the following questions as they relate to the demand for gym clothes for college students.

“the gym in a college town discounts gym memberships by 25% for college students”
a. is this a change in demand or change in quantity demanded?
b. increase, decrease (change in demand), or no change (change in quantity demanded)?
c. what caused this change?
d. draw the demand curve below on your paper. illustrate the change that took place. (be sure to label)

Explanation:

• Question 22: A change in price causes movement along a demand curve. Other factors shift the curve.
• Question 23: Unit - elastic refers to a changing price that causes a proportional change in total revenue. Elastic means a change in price causes a more - than - proportional change in quantity demanded, inelastic means a less - than - proportional change, and total expenditures are related but not the correct term here.
• Question 24: Add up the quantities demanded by each consumer at each price. At a price of $4$, the total quantity demanded is $4 + 5+3=12$; at $3$, it is $6 + 6+5 = 17$; at $6$, it is $1+2 + 0=3$; at $5$, it is $2+3 + 1=6$.
• Question 25: Marginal utility is the satisfaction or usefulness obtained by a consumer from acquiring one more unit of a product. Income effect is related to changes in purchasing power due to price changes, utility is overall satisfaction, and substitution effect is related to switching to other goods due to price changes.
• Question 26: For example, when the price of apples decreases, consumers tend to buy more apples. This is in line with the Law of Demand which states that, ceteris paribus, as the price of a good falls, the quantity demanded of that good rises.
• Question 27: The best synonym for marginal is additional. Marginal utility is the additional utility from consuming one more unit.
• Question 28:
• A. This is a change in quantity demanded because it is a price - related change for gym memberships which affects the demand for gym clothes.
• B. Since the price of gym memberships (a related good) has decreased, the quantity demanded of gym clothes will increase (assuming gym memberships and gym clothes are complementary goods).
• C. The cause of the change is the decrease in the price of gym memberships.
• D. On a demand curve for gym clothes, with price on the vertical axis and quantity on the horizontal axis, there will be a movement along the demand curve downwards and to the right to show an increase in quantity demanded.

Answer:

• 22. d. a change in price
• 23. b. unit elastic
• 24. None of the above (as no given price results in a market demand of 14)
• 25. b. marginal utility
• 26. When the price of apples decreases, consumers buy more apples.
• 27. additional
• 28.
• A. Change in quantity demanded
• B. Increase
• C. Decrease in the price of gym memberships
• D. Movement along the demand curve downwards and to the right to show an increase in quantity demanded.