Demand Basics
The Law of Demand states "When price goes down, quantity demanded..."
Goes up
Shifts in the demand curve happen for all factors EXCEPT ______, which instead shifts a point along the curve.
Price
Inelastic demand and elastic demand are less than and greater than ________, respectively.
One
A graphic representation of a demand schedule.
Demand Curve
When the largest portion of a population is in its infancy, demand for retirement homes is ______.
Low (decreased)
This is a table that lists the quantity of a good each person will buy at each different price.
Demand Schedule
If you expected bikes to get more expensive tomorrow, your demand for bikes now would
Increase (go up)
Name one factor that affects elasticity of demand.
Availability of substitutes; relative importance; necessities vs. luxuries; change over time
Two goods that are bought and used together.
Complements
Which kind of demand schedule measures quantity demanded at each price for entire markets?
Market demand schedule
When consumers react to an increase in a good's price by consuming less of that good and more of other goods.
Substitution Effect
If demand for hot dogs goes up, the demand for ketchup would...
Also go up
______ demand has a steeper slope on the demand curve.
Inelastic
Describes demand that is very sensitive to a change in price.
Elastic
A very appealing advertisement might shift the demand curve this direction
Right
Demand Curves and Schedules measure _______ of a product at different _______.
Quantity demanded; prices
Folgers at-home coffee might be labelled a(n) _________ as compared to Starbucks coffee.
Inferior good
In order to increase total revenue in an inelastic demand market, producers should _______ prices.
Increase
A good that consumers demand more of when their incomes increase
Normal good
Because Mr. Rewa foresees an increase in income later, his demand for this product right now is low.
A car!
What is the "Income Effect"?
The change in consumption resulting from a change in income.
What does "Ceteris Paribus" refer to?
The Latin phrase for "All other things held constant," meaning everything except price.
*Without looking at you notes*
Write the formula for the elasticity of demand on a white board
Elasticity =
percentage change in quantity demanded / percentage change in price
When consumers react to an increase in a goods price by consuming less of that good and more of other goods
Substitution effect
*Without looking at your notes*
Write the formula for finding percentage change in quantity demanded or price.
Percentage change =
Original number - New number / Original number
x 100