Chapter+4+HW


 * 4.1 Take Notes on pg. 79-83...Answer questions #1-4 on pg 83**

1. Income effect is the change in consumption resulting from a change in real income. When you buy something and realize you cannot afford of because of your income you need to change your spending habits. 2. The three characteristics of the demand curve are it shows the price of all goods and the quantity that the subject will buy at the set prices, it slopes downward to the right, and it shows the quantities demanded by all consumers. 3. The law of demand can apply only in a free market economy because it rely's on consumers freedom to choose what they want to buy, this doesn't exist in other economies. 4.
 * PriceOfCD's || QuanityDemandPerDay ||
 * $6.00 || 12 ||
 * $10.00 || 8 ||
 * $8.00 || 10 ||
 * $7.00 || 11 ||
 * $10.50 || 6 ||
 * $5.00 || 16 ||


 * 4.2 Pg 88. #1-7**

1. A used bike is a good example of an inferior good. 2. When you but peanut butter you want jelly so it compliments jelly. 3. Car and a motorcycle can be consiidered substitutes. The demand curve only really looks at the prices going up and down while the other focus's on other aspects than price like quality. 4. Ceteris paribus assumption affects the demand curve

1. If the price of a good relates to the amount people will purchase, its elastic. 2. Video games are games that have elastic demand. 3. demand for home heating fuel is inelastic, because at any price, people need to heat their homes. 4. We can calculate total revenue by the amount of goods sold and the price of said goods. 7. Changes such as more fuel efficient cars being produced can affect demand.
 * 4.3 Take Notes...Answer questions #1-4, 7**


 * Pg 98-99 #9-14**

9. The substitution effect is when goods can be replaced by other goods so the prices stay competitively low. An example of this is gatoraid and poweraid 10. Three causes of shifts in the demand curve are income, population, and personal taste. 11. Economists use percentage change to calculate elasticity of demand because they can generalize about more than one product at a time. 12. Four factors that affect elasticity are availability of substitutes, relative importance, necessities versus luxuries, and change over time. 13. Inferior goods will always be needed because there's always people with lower incomes who need something. Demand for an inferior good would increase if the overall income increases. 14. False, the income increase will shift the curve right.