Questions and Answers
What does demand refer to?
The quantity of a product or service desired by buyers at a certain period of time.
What does the Law of Demand state?
An increase in the price of a good lowers the quantity demanded, while a decrease in price raises the quantity demanded.
What is a demand schedule?
A table that shows the quantity of a good that buyers would purchase at each price.
What is a demand curve?
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What are the two types of movement of the demand curve?
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What does a change in the product's price result in regarding the demand curve?
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What happens when non-price factors change?
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What does a shift to the right in the demand curve indicate?
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What does a shift to the left in the demand curve indicate?
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How does income affect demand?
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What effect does population increase have on demand?
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What factors can influence consumer taste?
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How can the price of related goods influence demand?
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What are complementary goods?
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What are substitute goods?
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How do expectations of buyers affect demand?
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Study Notes
Demand Overview
- Demand refers to the quantity of a product or service desired by buyers at a specific time, influenced by the product's ability to satisfy needs or provide pleasure.
The Law of Demand
- The Law of Demand indicates that, holding other factors constant, an increase in price leads to a decrease in quantity demanded, while a decrease in price increases quantity demanded.
- Price and quantity demanded have an inverse relationship.
Demand Schedule
- A demand schedule is a tabular representation detailing how much of a good buyers are willing to purchase at varying price levels.
Demand Curve
- A demand curve graphically illustrates the information contained in a demand schedule.
Movement of the Demand Curve
- Movements along the demand curve are caused by changes in the product's price.
- Shifts in the demand curve occur due to non-price factors influencing demand.
Price-Driven Movement
- A change in a product's price results in a movement along the demand curve, reflecting a change in the quantity demanded.
Non-Price Factors Affecting Demand
- Changes aside from price modify the demand curve itself, leading to a new demand curve.
Rightward Shift
- A rightward shift in the demand curve signifies an increase in overall demand.
Leftward Shift
- A leftward shift indicates a decrease in overall demand.
Income Influence
- A buyer's income positively affects demand; higher income typically results in increased demand for goods and services.
Population Dynamics
- An increasing population generally leads to higher demand for various goods and services, as a larger population correlates with a larger market.
Consumer Taste Variability
- Consumer preferences are influenced by factors such as age, gender, situation, habits, and weather conditions.
Related Goods Pricing
- The demand for a product can be swayed by the prices of related goods, including substitutes and complements.
Complementary Goods
- Complementary goods, such as flashlights and batteries, have a relationship where an increase in the price of one typically decreases the demand for the other.
Substitute Goods
- Substitute goods, like beef and pork, show that an increase in the price of one can lead to an increased demand for the other.
Buyer Expectations
- Expectations of rising prices for essential commodities can lead consumers to purchase more now, driving current demand.
- Anticipation of higher future income may also motivate consumers to increase present consumption.
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Description
Test your understanding of the Law of Demand with these flashcards. Learn key terms such as 'demand' and its implications on pricing and quantity. Perfect for students studying economics in high school or college.
