What is Demand
What is demand in economics?
Demand is the quantity of a good or service that consumers are willing and able to purchase at various prices.
Name one factor that can cause a shift in demand.
Factors such as consumer income, tastes, prices of related goods, and expectations can cause a shift in demand.
What does "elasticity of demand" refer to?
Elasticity of demand measures how the quantity demanded of a good responds to changes in price.
What is a demand curve?
A demand curve is a graphical representation of the relationship between the price of a good and the quantity demanded.
How does understanding demand help businesses?
Understanding demand helps businesses make informed decisions about pricing, inventory, and marketing strategies.
What is the law of demand?
The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases, and vice versa.
How does an increase in consumer income affect demand for normal goods?
An increase in consumer income typically leads to an increase in demand for normal goods.
What is elastic demand?
Elastic demand occurs when a small change in price leads to a large change in the quantity demanded.
What does a downward-sloping demand curve indicate?
A downward-sloping demand curve indicates that as price decreases, the quantity demanded increases.
Give an example of how a sudden increase in demand can affect prices.
A sudden increase in demand for a popular toy during the holiday season can lead to higher prices due to limited supply.
What is a shift in demand?
A shift in demand occurs when a good's demand changes due to factors other than its price, such as consumer preferences or income levels.
What effect does the price of substitute goods have on demand?
If the price of a substitute good increases, the demand for the original good typically increases as consumers switch to the cheaper alternative.
What is inelastic demand?
Inelastic demand occurs when changes in price have little effect on the quantity demanded.
What factors might cause a demand curve to shift to the right?
Factors such as increased consumer income, changes in tastes, or an increase in the price of substitutes can cause the demand curve to shift to the right.
How can government policies affect demand?
Government policies, such as taxes or subsidies, can influence demand by altering the prices consumers pay.
Define “market demand.”
Market demand is the total quantity of a good or service demanded by all consumers in the market at various prices.
What are complementary goods? Give an example.
Complementary goods are products that are often consumed together. An example is coffee and sugar.
What is unitary elasticity?
Unitary elasticity occurs when the percentage change in quantity demanded is equal to the percentage change in price.
What does it mean if the demand curve is perfectly elastic?
A perfectly elastic demand curve means that consumers will only buy at one price, and any increase in price will result in zero quantity demanded.
What role do advertisements play in influencing demand?
Advertisements can create awareness and interest in products, potentially increasing consumer demand.
Explain the difference between individual demand and market demand.
Individual demand refers to the demand for a good or service by a single consumer, while market demand is the sum of all individual demands for that good or service.
How can consumer expectations influence demand?
If consumers expect prices to rise in the future, they may increase their current demand, causing a shift in the demand curve.
How do you calculate the price elasticity of demand?
Elasticity = % Change in Q Demanded
% Change in P
Describe the shape of a perfectly inelastic demand curve.
A perfectly inelastic demand curve is vertical, indicating that quantity demanded does not change regardless of price changes.
How can a natural disaster impact demand for certain goods?
A natural disaster can increase demand for essential goods, such as food and water, while decreasing demand for non-essential goods.