Law of Demand
Changes in Quantity Demanded
Changes Demand
The Demand Curve
Elasticity of Demand
100
What does the law of demand state about the relationship between price and quantity demanded?
As the price of a good increases, the quantity demanded decreases, and vice versa.
100
What is the term for the movement along the demand curve caused by a price change?
Change in quantity demanded.
100
What causes a shift in the demand curve to the right?
An increase in demand
100
What is a demand curve is a graphic representation of?
A demand schedule.
100
What does the term "elasticity of demand" refer to?
It measures how much the quantity demanded changes in response to a change in price.
200
What is an example of a good that follows the law of demand?
(the relationship between price and quantity demanded)
A common example is gasoline; as prices rise, people tend to buy less
200
What happens to quantity demanded when the price of a product decreases?
The quantity demanded increases.
200
Name one factor that can decrease demand for a product.
A decrease in consumer income; the introduction of a substitute product; a decrease in demand for a compliment; or a decrease in population.
200
What does the demand curve typically look like?
Draw it.
It slopes downward from left to right, indicating that lower prices lead to higher quantity demanded.
200
What is the formula for calculating price elasticity of demand?
300
How does the law of demand explain consumer behavior during a sale?
Consumers are likely to buy more of a product when its price is reduced due to the inverse relationship between price and quantity demanded.
300
What happens to quantity demanded when the price of a product increases?
The quantity demanded decreases
300
How does consumer expectations about an increase in future prices impact current demand?
If consumers expect prices to rise in the future, they are likely to buy more now
300
What is represented on the x-axis and y-axis of a demand curve?
The x-axis represents quantity demanded, while the y-axis represents the price.
300
What is the difference between elastic and inelastic demand?
Elastic demand means quantity demanded changes significantly with price changes, while inelastic demand means quantity demanded changes little with price changes.
400
What is the term for the graphical representation of the law of demand?
The demand curve.
400
If the price of a popular smartphone drops ...
... more consumers are likely to purchase it.
400
What is the difference between a change in demand and a change in quantity demanded?
A change in demand refers to a shift of the entire demand curve, while a change in quantity demanded refers to movement along the demand curve due to a change in price.
400
How can the demand curve be affected by a change in consumer preferences in favor of a product?
If consumer preferences shift towards a product, the demand curve shifts to the right, indicating an increase in demand.
400
How do necessities and luxuries typically differ in terms of elasticity?
Necessities tend to have inelastic demand, while luxuries tend to have elastic demand.
500
Explain how the law of demand applies to inferior goods.
For inferior goods, as income decreases, demand increases.
500
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500
What role does effective advertising play in changing demand?
Effective advertising can increase consumer awareness and preferences, shifting the demand curve to the right.
500
Explain what a perfectly elastic demand curve looks like.
A perfectly elastic demand curve is horizontal, indicating that consumers will buy any quantity at a certain price, but none at higher prices.
500
What does it mean when demand is unitary elastic?
It means that the percentage change in quantity demanded is equal to the percentage change in price, resulting in no change in total revenue.