General Info
List 2 factors that cause a change in demand.
Consumer Income and Consumer Tastes.
a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service.
Demand
a change that is graphically represented as a movement along the demand curve.
A change in QUANTITY Demanded.
What is demand elasticity?
The extent or amount of change that causes a proportional change in quantity demanded
Is consumer preferences a factor of demand?
Yes
What is the only factor that can cause a change in QUANTITY DEMANDED?
a graph showing the quantity demanded at each and every price that might prevail in the market.
Demand Curve
the change in quantity demanded because of a change in price that alters consumers’ real income.
Income Effect
When a change in price causes a relatively smaller change in the quantity demanded.
An Inelastic Demand
Coke and Pepsi are (BLANK) products.
substitute
a given change in price causes a proportional change in quantity demanded. This is called...
Unit Elasticity
What states that higher prices result in lower demand and lower prices result in higher demand?
The Law of Demand?
How is a change in DEMAND graphed differently than a change in QUANTITY DEMANDED?
The entire demand curve shifts.
If change in price and change in expenditures if pointing the same way, what kind of elasticity is this?
Elastic Elasticity
How do we test for elasticity. GIVE NAME AND FORMULA
We use the TOTAL expenditures test-multiply the quantity demanded by the price.
An expensive automobile is an example of what demand elasticity type? Why?
What does the Market Demand Curve show?
It shows the quantities demanded by everyone in the market who is interested in purchasing a product.
TRUE OR FALSE: The number of Consumers is a factor that affects DEMAND.
TRUE- bet I made u think about that :)
If the price of chicken is expected to rise next week, how will this affect the demand for steak?
The demand for steak will increase
Is Insulin Elastic or Inelastic? Why?
Inelastic-Because Insulin answers NO to all 3 questions.
How are expenditures affected if the elasticity of a graph is Unit Elastic,
There is no change
Mojtaba gets a free pizza that has 10 slices. After he eats the fourth slice, his appetite becomes satisfied, every slice after becomes less and less satisfying. This is an example of...
Diminishing Marginal Utility?
Mojtaba goes to the store to get chocolate ice cream. He sees that the price of vanilla ice cream has dropped drastically. Now he is more likely to go with the Vanilla Ice cream. This is an example of...
The Substitution Effect- the change in quantity demanded because of the change in the relative price of the product
The quantity demanded for Widgets is 12 at a price of $10. The price goes down to $8 and the quantity demanded goes up to 13. Is the product showing elastic, Unit elastic, or inelastic properties? Why?
Inelastic properties-Because the relative change in price is larger than the quantity demanded.
What are the questions that can give us a reasonably good idea about a product’s demand elasticity?
Can purchase be delayed?
Are adequate substitutes available?
Does purchase use a large portion of income?