16 Questions
What is a competitive market?
A competitive market is one with many buyers and sellers, each has a negligible effect on price.
What is the law of demand?
The law of demand states that the quantity demanded of a good falls when the price of the good rises, other things equal.
What is a demand schedule?
A demand schedule is a table that shows the relationship between the price of a good and the quantity demanded.
What does the tabular approach show in presenting demand?
The tabular approach presents demand in a form of schedule or table.
How does a perfectly competitive market function?
In a perfectly competitive market, all goods are exactly the same and buyers & sellers are so numerous that no one can affect market price – each is a 'price taker'.
What is the graphical approach in presenting demand?
The graphical approach presents demand in a form of curve or graph.
What is the demand equation in terms of price?
P = a - bQd
How do you solve for the slope (b) in the demand equation?
b = (P2 - P1) / (Qd2 - Qd1)
What is the intercept or constant (a) in the demand equation for lattes?
a = 8
What is the final demand equation for lattes in terms of price and quantity demanded?
P = 8 - 0.5Qd
What does the demand equation 1/2Qd = 16 - 2P imply?
An increase in the price of latte by $1 results in a decrease of 2 units in the quantity demanded.
What is the market quantity demanded for lattes when the price is $3.00?
Market Qd = 15
In the Latte market, what is the total quantity demanded when the price is $4.00?
Total Qd = 12
How is the market demand curve for lattes derived?
It is derived by summing the quantities demanded by all buyers at each price to obtain the market quantity demanded.
What does a change in quantity demanded represent?
Changes in the price of a good lead to a change in the quantity demanded of that good.
What does the change in demand imply?
It represents a shift in the entire demand curve due to factors other than price.
Test your knowledge of market analysis and demand in basic microeconomics with this quiz. Topics include competitive markets, demand behavior, and the characteristics of a perfectly competitive market.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
