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Questions and Answers
What differentiates demand from mere desire?
What differentiates demand from mere desire?
- The time of purchase
- The type of commodity involved
- The location of the transaction
- Presence of ability and willingness to pay (correct)
Which scenario illustrates that something is not considered demand?
Which scenario illustrates that something is not considered demand?
- A customer desires to purchase a car and is pre-approved for a loan
- A shopper is willing to buy a book and has cash in hand
- A consumer wants to buy ice cream and has enough money
- A person has funds but refuses to buy due to high prices (correct)
Which of the following factors does NOT influence demand?
Which of the following factors does NOT influence demand?
- Guaranteed future income (correct)
- Consumer preferences
- Place
- Time
What is an essential component of demand according to its definition?
What is an essential component of demand according to its definition?
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How is demand considered a subjective term?
How is demand considered a subjective term?
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Study Notes
Definition of Demand
- Demand combines desire, ability, and capacity to pay for a commodity.
- Desire without sufficient funds does not qualify as demand.
Importance of Willingness to Pay
- A person might have both the desire and ability to pay but may lack the willingness due to perceived value.
- Example: A consumer may want pizza and can afford it yet declines to purchase due to its high price.
Relativity and Subjectivity of Demand
- Demand is relative to various factors, including:
- Price: A change in price can influence demand.
- Time: Demand can vary over different periods.
- Place: Location can affect demand levels for certain goods.
- Demand is subjective and heavily influenced by individual preferences and circumstances.
Factors Affecting Demand
- Understanding demand is essential for recognizing how different factors interact and influence purchasing decisions.
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Description
This quiz explores the concept of demand in economics, defined as the desire backed by the ability and willingness to pay for goods. It examines scenarios where desire does not translate into demand due to factors like financial capability or price sensitivity. Test your understanding of this fundamental principle in economic theory.
