IAL Economics revision: Chapters 7-8

What is the definition of consumer surplus?

• The difference between how much buyers are prepared to pay for a good and what they actually pay.

• The difference between the price of a good and the price of other goods.

• The quantity purchased of a good at any given price, given that other factors of demand remain unchanged.

• The value or utility that individual consumers gain from the last product consumed falls the greater the number consumed.

What is the definition of contraction of demand?

• When quantity demanded for a good falls because its price rises; it is shown by a movement up the demand curve.

• When quantity demanded for a good increases because its price falls; it is shown by a movement down the demand curve.

• The long-run average growth rate for an economy over a period of time.

• The responsiveness of demand is proportionally greater than the change in price.

What is the definition of demand curve?

• The line on a price/quantity diagram that shows the level of effective demand at any given price.

• The difference between how much buyers are prepared to pay for a good and what they actually pay.

• The quantity purchased of a good at any given price, given that other factors of demand remain unchanged.

• The value or utility that individual consumers gain from the last product consumed falls the greater the number consumed.

What is the definition of extension of demand?

• When quantity demanded for a good falls because its price rises; it is shown by a movement up the demand curve.

• When quantity demanded for a good increases because its price falls; it is shown by a movement down the demand curve.

• The long-run average growth rate for an economy over a period of time.

• The responsiveness of demand is proportionally greater than the change in price.

What is the definition of law of diminishing marginal utility?

• The difference between how much buyers are prepared to pay for a good and what they actually pay.

• The value or utility that individual consumers gain from the last product consumed falls the greater the number consumed.

• The quantity purchased of a good at any given price, given that other factors of demand remain unchanged.

• The line on a price/quantity diagram that shows the level of effective demand at any given price.

What is the definition of shift in the demand curve?

• A movement of the whole demand curve to the right or left of the original caused by a change in any variable affecting demand except price.

• The difference between how much buyers are prepared to pay for a good and what they actually pay.

• The quantity purchased of a good at any given price, given that other factors of demand remain unchanged.

• The value or utility that individual consumers gain from the last product consumed falls the greater the number consumed.

What is the definition of underlying growth rate?

• The difference between how much buyers are prepared to pay for a good and what they actually pay.

• The long-run average growth rate for an economy over a period of time.

• The quantity purchased of a good at any given price, given that other factors of demand remain unchanged.

• The value or utility that individual consumers gain from the last product consumed falls the greater the number consumed.

What is the definition of elastic (demand)?

• The responsiveness of demand is proportionally greater than the change in price.

• The responsiveness of demand is proportionally less than the change in price.

• The proportionate response of changes in quantity demanded to a proportionate change in price.

• The difference between how much buyers are prepared to pay for a good and what they actually pay.

What is the definition of inelastic (demand)?

• The responsiveness of demand is proportionally greater than the change in price.

• The responsiveness of demand is proportionally less than the change in price.

• The proportionate response of changes in quantity demanded to a proportionate change in price.

• The difference between how much buyers are prepared to pay for a good and what they actually pay.

What is the definition of price elasticity of demand?

• The difference between how much buyers are prepared to pay for a good and what they actually pay.

• The responsiveness of demand is proportionally less than the change in price.

• The proportionate response of changes in quantity demanded to a proportionate change in price.

• The long-run average growth rate for an economy over a period of time.