Questions and Answers
What happens to demand for goods and services when there is an increase in income?
What can cause market demand to shift?
Changes in the number of consumers
Changes in consumer tastes and preferences mean that consumers buy the same products year after year.
False
What factor can change consumer behavior without actual price changes?
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A change in the price of one product in a pair of substitute goods can cause the demand curve for the other good to shift. This refers to changes in the price of ______.
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What is a complementary good?
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Study Notes
Demand Shifters
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Changes in income
- Increased income leads to higher demand for goods and services.
- Decreased income results in lower demand for such products.
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Changes in the number of consumers
- An increase or decrease in the consumer base directly impacts market demand.
- A larger population generally raises overall demand in the market.
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Changes in consumer tastes and preferences
- Demand fluctuates based on trends; popular products see a rise in consumer interest.
- Consumers continuously adapt their preferences, influencing demand patterns.
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Changes in consumer expectations
- Anticipated future price changes can alter current consumer behavior.
- Expectations about product availability or pricing can prompt immediate purchasing decisions.
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Changes in the price of substitute goods
- If the price of one substitute increases, the demand for its alternative may rise.
- Consumers switch to more affordable substitutes, impacting the demand curve.
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Changes in the price of complementary goods
- Complementary goods are consumed together; a price increase in one can decrease demand for the other.
- For example, if the price of coffee rises significantly, the demand for cream may drop.
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Description
Test your understanding of the factors that shift demand in economics. This quiz covers aspects such as changes in income, the number of consumers, and consumer preferences. Explore how these elements influence overall market demand and consumer behavior.
