Factors Affecting Demand
what are substitutes
Substitutes are goods and services that can be used instead of other goods and services, causing a change in demand
What factors affect the elasticity of demand?
What changes demand?
price $
What is a demand schedule
A listing of how much of an item an individual is willing to purchase at each price
What is demand?
Demand is the desire to have a specific good or service and the ability to pay for it.
When does a change in demand occur?
What is unit elastic demand?
When the percentage change in price and quantity demanded are the SAME?
what is the Income effect
the term used for a change in the amount consumers will buy because the purchasing power of their income changes
What is a demand curve
A graph that shows how much of a good or service an individual will buy at each price.
Would demand for a good that is a necessity be elastic or inelastic.
The demand for a necessity is inelastic.
What is the difference between normal goods and inferior goods.
Normal goods are goods that consumers demand MORE of when their income rises. Inferior goods are goods that consumers demand LESS of when their incomes rises.
What is elastic demand?
When change in price goes either up or down, leads to relatively LARGER change in the quantity demanded.
What is the substitution effect
The pattern of behavior that occurs when consumers react to a change in the price of a good or service by buying a substitute product.
How does the demand curve change when demand decreases?
The demand curve shifts to the LEFT.
True of False: Consumers receive more satisfaction from each additional purchase if they have to pay the same price.
False. Consumers would only receive more satisfaction if they had to pay less for each additional purchase.
There are SIX factors of demand: Income, Market size, consumer tastes, consumer expectation, substitute goods, and complementary goods.
What is "elasticity of demand?"
How responsive consumers are to price changes in the marketplace.
What type of relationship does price and quantity demanded have?
An inverse, or opposite, relationship
How does a demand curve change when demand is increased?
The curve shifts to RIGHT.
What percentage is considered inelastic?
When the percentage is less than 1%.
If a product's popularity influenced consumers' purchases, what factor would that be?
Consumer taste
How do you calculate elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price.
Would consumers demand more or less of a good when the price increases?
Consumers would demand less of a good if the price increased
From top left to bottom right.
What percentage is considered elastic?
When the percentage is greater than 1%.