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Questions and Answers
What does the law of demand state?
What does the law of demand state?
- As the price of a good increases, demand for it decreases. (correct)
- Demand remains constant regardless of price changes.
- Higher prices lead to higher demand.
- Price and demand are independent of one another.
Which of the following would likely cause a movement along the demand curve?
Which of the following would likely cause a movement along the demand curve?
- A change in consumer income.
- A change in the price of the good. (correct)
- A change in the price of substitute goods.
- A change in consumer preferences.
Which scenario exemplifies the law of demand?
Which scenario exemplifies the law of demand?
- Consumers buy less of a good as its price decreases.
- Consumers continue to buy the same quantity regardless of price.
- Consumers ignore changes in the price of a good.
- Consumers buy more of a good as its price decreases. (correct)
What could cause a decrease in demand, as per the law of demand?
What could cause a decrease in demand, as per the law of demand?
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Which factor does not directly affect demand as per the law of demand?
Which factor does not directly affect demand as per the law of demand?
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Study Notes
Law of Demand
- The law of demand states that as the price of a good or service increases, the quantity demanded decreases, assuming all other factors remain constant.
Movement Along the Demand Curve
- A change in price directly affects the quantity demanded, leading to a movement along the demand curve.
Law of Demand Example
- Scenario: When the price of a popular brand of sneakers decreases, consumers purchase more of those sneakers.
Shift in the Demand Curve
- A decrease in demand is represented by a leftward shift of the demand curve and is caused by factors like:
- Changes in consumer income: A decrease in disposable income could lead to a decrease in demand for non-essential goods.
- Changes in preferences: If consumers develop a preference for a substitute product, the demand for the original product could decrease.
- Changes in consumer expectations: If consumers expect the price of a good to decrease in the future, they may delay their purchases, leading to a decrease in current demand.
Factors Not Affecting Demand Directly
- The law of demand focuses on the relationship between price and quantity demanded. Factors that are not directly related to the price of the good, such as production costs, do not shift the demand curve, but can change supply.
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Description
Test your understanding of the law of demand in economics. This quiz covers the basic principles, scenarios, and factors that influence demand. Dive in to see how well you grasp these crucial concepts!
