The Law of Demand
What is Demand?
Demand curves slope this direction.
Top left to bottom right.
Goods consumers demand less of when their income rises.
What are inferior goods.
Measures how responsive consumers are to price change.
What is elasticity of demand?
The way total revenue is calculated.
Price x Quantity
States that when prices go up the quantity demanded goes down. When prices go down the quantity demanded goes up.
What is the Law of demand?
The Change in the amount consumers will buy based on the money they have.
What is income effect?
A group of individuals moved to a new area causing the demand to rise in that area. This factor is shifting demand.
What is market size?
What is elastic?
a method of measuring elasticity by comparing total revenues.
What is the total revenue test?
The two things necessary for demand.
What Desire and ability to pay for it?
The change in the amount that consumers will buy based on the products that can be used in place of one another.
What is substitution effect?
This causes demand for a popular item to increase.
What is consumer taste?
When the quantity demanded changes little to price change.
What is inelastic?
A product is unit elastic when after calculation you are left with this number.
What is 1?
Graphically shows data from a market demand schedule.
What is a market demand curve?
You drink 1 lemonade and it is refreshing, the next cup does not taste as good, the third cup was less fulfilling as the second.
Law of diminishing marginal utility.
Goods that consumers demand more of when their incomes rises.
What are normal goods.
What is unit elastic?
This is the formula for calculating elasticity of demand.
OLD QUANTITY - NEW QUANTITY DIVIDED BY OLD MULTIPLIED BY 100
OLD PRICE - NEW PRICE DIVIDED BY OLD MULTIPLIED BY 100
QUANTITY DIVIDED BY PRICE
a listing of how much of an item an individual is willing to purchase at each price.
What is a demand schedule?
When something prompts consumers to buy products at a different price.
What is change in demand?
As sales for iPhone increased so did the sales of airpods. This is a result of this factor.
What are compliments?
This medicine is and inelastic good.
What is insulin?
The quantity demanded for a new product went from 2000 to 6000. The price went from 10 to 8. Measure the elasticity.
10 Product is elastic.