Exam Solution Manual for Macroeconomics- Demand Already Passed
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Course
Macroeconomics
Institution
Macroeconomics
Exam Solution Manual for Macroeconomics- Demand Already Passed
The Demand Curve is downward sloping because - Answers 1. As prices rise, the purchasing power of each dollar earned falls, and consumers are willing and able to buy less of a good. 2. The benefit of consuming more of a good falls wit...
Exam Solution Manual for Macroeconomics- Demand Already Passed
The Demand Curve is downward sloping because - Answers 1. As prices rise, the purchasing power of
each dollar earned falls, and consumers are willing and able to buy less of a good. 2. The benefit of
consuming more of a good falls with each additional unit, so the price consumers are willing and able to
pay also fails with increased consumption. 3. As consumers purchase substitutes, the quantity
demanded of the good falls.
Service - Answers An intangible product or action that consumers, firms, or governments wish to
purchase
Demand Curve - Answers A graphical representation of the relationship between the price of a good,
service or resource and the quantity that individuals and firms are willing and able to buy, all else held
constant, describes the demand curve
Resource - Answers Any item, whether a gift of nature, the result of production, or the result of human
effort, that is used to produce goods and services
3 Main reasons why demand curves are downward sloping - Answers 1) Income Effect
2) Substitution Effect
3) Diminishing Marginal Utility
As the price of a good, service or resource rises: - Answers The quantity demanded will fall
Income Effect - Answers The effect that a change in the price of a good, service, or resource has on
purchasing power of income
The horizontal summation of individual demand curves - Answers Market Demand
Goods - Answers Tangible product that consumers, firms, or governments wish to purchase
Demand Schedule - Answers A tabular representation of the relationship between the price of a good,
service or resource and the quality that individuals and firms are willing and able to buy, all else held
constant, describes the:
Substitution Effect - Answers The effect that a change in the price of one good, service, or resource has
on the demand for another
Market Demand - Answers Represents the horizontal summation of individual demand curves
The Opportunity cost of having more capital and being more productive in the future is reduced
__________ today. - Answers Consumption
By allocating time and resources to schooling instead of another activity, you will have
_________________ capital in the future, increasing your productivity. - Answers Human
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