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What is demand in economics?
What is demand in economics?
- The amount of a good or service consumers want to buy at a given price during a period of time
- The amount of a good or service consumers are willing to buy at a given price during a period of time
- The amount of a good or service consumers are both willing and financially able to buy at a given price during a period of time (correct)
- The amount of a good or service consumers need to buy at a given price during a period of time
The law of demand states that the quantity demanded of a commodity will be larger at higher market prices.
The law of demand states that the quantity demanded of a commodity will be larger at higher market prices.
False (B)
What influences demand?
What influences demand?
Utility
The law of diminishing marginal utility states that the extra (marginal) units consumed of any good or service usually yield less and less additional ____________________.
The law of diminishing marginal utility states that the extra (marginal) units consumed of any good or service usually yield less and less additional ____________________.
Match the following concepts with their definitions:
Match the following concepts with their definitions:
Why do people resent having to pay the same price for each extra unit of a good or service?
Why do people resent having to pay the same price for each extra unit of a good or service?
The utility of a good or service is constant.
The utility of a good or service is constant.
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Study Notes
Demand
- Demand is the amount of a good or service that consumers are both willing and financially able to buy at a given price during a period of time.
- Effective demand requires both the desire and financial ability to purchase a good or service.
- Many people may want a luxury item, but if they cannot afford it, there is no effective demand for it.
Law of Demand
- The law of demand states that, ceteris paribus (all other things being equal), the quantity demanded of a commodity will be smaller at higher market prices and larger at lower market prices.
Utility and Demand
- Demand is influenced by the utility of a good or service, which is the satisfaction people get from consuming or using it.
- The law of diminishing marginal utility states that the extra units consumed of any good or service usually yield less and less additional utility.
- As marginal utility decreases, consumers are less willing to pay the same price for each additional unit, requiring a lower price to entice them to buy more.
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