Questions and Answers
What happens to demand when the price of a normal good increases?
Demand decreases
How do changes in consumer preferences impact demand for certain products?
They can significantly influence demand
What happens to demand for a product when the price of its substitute increases?
Demand for the product increases
How can effective marketing strategies influence consumer behavior?
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How do changes in taxation, subsidies, or regulations impact demand for goods and services?
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Study Notes
Demand Analysis
- When the price of a normal good increases, demand for it decreases, ceteris paribus.
- Changes in consumer preferences can increase or decrease demand for certain products, depending on whether the change is positive or negative.
Substitutes and Demand
- When the price of a substitute increases, demand for the original product increases, as consumers turn to the cheaper alternative.
Marketing and Demand
- Effective marketing strategies can increase demand for a product by altering consumer behavior, such as by changing perceptions or creating a sense of urgency.
Government Intervention and Demand
- Changes in taxation, subsidies, or regulations can impact demand for goods and services, by altering their relative prices or attractiveness to consumers.
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