Econ: Demand Crossword Flashcards

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Questions and Answers

What are substitutes?

Goods that are inelastic

Goods that are used together

Goods that can replace similar goods when prices rise (correct)

Goods that decrease in utility as consumed

Inelastic demand is nearly _____ when plotted on the demand curve.

vertical

What does a demand curve plot?

A demand curve plots the information in a demand schedule.

What is a complementary good?

A good that is commonly used with others Signup and view all the answers

Inelastic demand exists when a change in a good's price has little impact on quantity demanded.

True Signup and view all the answers

Consumer ___ and preference affects demand.

tastes Signup and view all the answers

What does market size refer to?

Market size changes occur when there are more or fewer consumers. Signup and view all the answers

What role does income play in demand?

Increased income can shift the demand curve Signup and view all the answers

The law of demand states there is an _____ relationship between price and quantity demanded.

inverse Signup and view all the answers

What does quantity demanded refer to?

The amount of a good or service that a consumer is willing and able to buy at each particular price. Signup and view all the answers

Elastic demand exists when a small change in a good's price causes a major change in quantity demanded.

True Signup and view all the answers

What does the substitution effect describe?

The tendency to purchase a similar, lower-priced product instead Signup and view all the answers

Elastic demand is nearly ________ when plotted on the demand curve.

horizontal Signup and view all the answers

What is diminishing marginal utility?

The natural decrease in the utility of a good or service as more units are consumed. Signup and view all the answers

What is purchasing power?

The amount of money that people have available to spend on goods and services. Signup and view all the answers

Prices of _ are determinants of demand.

related goods Signup and view all the answers

What does a demand schedule list?

The quantity of goods that consumers are willing and able to buy at a series of possible prices. Signup and view all the answers

Elasticity refers to the degree to which changes in a good's price affect the _____ demanded.

quantity Signup and view all the answers

What can cause a shift in the demand curve?

Changes in any of the determinants of demand. Signup and view all the answers

Match the following concepts with their descriptions:

Law of Demand = An increase in a good's price causes a decrease in quantity demanded Determinants = Factors that can shift the demand curve Elastic Demand = Demand that changes significantly with price changes Inelastic Demand = Demand that remains stable despite price changes Signup and view all the answers

The amount of a good or service that a consumer is willing and able to buy at various possible prices is called _____

demand Signup and view all the answers

Consumer ____ can shift demand, being optimistic or pessimistic.

expectations Signup and view all the answers

What is the income effect?

Any increase or decrease in consumers' purchasing power caused by a change in price. Signup and view all the answers

Study Notes

Demand Fundamentals

Substitutes are goods that can replace similar items when prices rise, affecting consumer behavior and choices.
The law of demand indicates an inverse relationship between price and quantity demanded: as prices increase, quantity demanded decreases and vice versa.

Demand Curve Characteristics

Demand curves are graphical representations of demand schedules, plotting quantity demanded against price.
Inelastic demand appears nearly vertical on a demand curve, showing that price changes have little effect on quantity demanded.
Elastic demand appears nearly horizontal, indicating that small price changes lead to significant changes in quantity demanded.

Types of Demand

Inelastic demand indicates that quantity demanded is relatively unaffected by price changes, while elastic demand shows a high sensitivity to price fluctuations.
Diminishing marginal utility explains the reduction in satisfaction from consuming additional units of a good, influencing demand.

Determinants of Demand

Key determinants include:
- Consumer Tastes: The popularity and preference for a product directly impact demand.
- Market Size: Fluctuations in the number of consumers can shift demand curves.
- Income: Consumers' purchasing power can shift demand based on their available money to spend.
- Related Goods: Prices of substitutes and complementary goods also influence demand decisions.
- Expectations: Optimistic or pessimistic future outlooks can cause demand shifts, as consumers adjust purchasing behaviors.
- Income Effect: Variations in purchasing power resulting from price changes affect demand.

Additional Concepts

The quantity demanded refers to the specific amount a consumer is willing and able to buy at various prices during a specific time frame.
The elasticity of demand measures how responsive the quantity demanded is to price changes, reflecting consumer sensitivity.
Demand schedules list quantities of goods consumers are prepared to buy at different prices, providing insights for analyzing demand.

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Description

Test your knowledge of economic principles related to demand with these flashcards. Each card presents vocabulary and definitions that are essential for understanding demand, substitutes, and complementary goods. Perfect for preparing for exams or reinforcing key concepts in economics.