Chapter 2

Question 1

What is demand?

Answer 1

Consumers willingness and ability to pay for a particular product or service

Question 2

What is marginal benefit?

Answer 2

The additional benefit from a choice, changing with circumstances

Question 3

What is the law of demand?

Answer 3

If price increases, the quantity demanded decreases

Question 4

What is market demand?

Answer 4

The sum of all the demands of all individuals willing and able to buy a product or service

Question 5

What are the five ways to shift a demand curve?

Answer 5

1. Preferences
2. Prices of related products
3. Income
4. Expected future prices
5. Number of consumers

Question 6

What are normal goods?

Answer 6

Products or services that you buy more of when your income increases

Question 7

What are inferior goods?

Answer 7

Products or services that you buy less of when your income decreases