Law of Demand Flashcards

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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?

The graphical representation of the demand schedule. Signup and view all the answers

What are the two types of movement of the demand curve?

Both A and B Signup and view all the answers

What does a change in the product's price result in regarding the demand curve?

A movement along the curve, representing a change in quantity demanded. Signup and view all the answers

What happens when non-price factors change?

There is a shift in the demand curve. Signup and view all the answers

What does a shift to the right in the demand curve indicate?

An increase in aggregate demand. Signup and view all the answers

What does a shift to the left in the demand curve indicate?

A decrease in aggregate demand. Signup and view all the answers

How does income affect demand?

A buyer's income has a positive effect on demand. Signup and view all the answers

What effect does population increase have on demand?

Demand for goods and services is expected to increase. Signup and view all the answers

What factors can influence consumer taste?

Age, gender, situation or need, habit, and weather. Signup and view all the answers

How can the price of related goods influence demand?

The demand for a good can be influenced by the prices of related goods. Signup and view all the answers

What are complementary goods?

Goods that are used together, such as flashlights and batteries. Signup and view all the answers

What are substitute goods?

Goods that can replace each other, such as beef and pork. Signup and view all the answers

How do expectations of buyers affect demand?

If buyers expect prices to rise, they may purchase more now to take advantage of current lower prices. Signup and view all the answers

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.

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.