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The quantity demanded of a good or service is the amount that ---------------------
The quantity demanded of a good or service is the amount that ---------------------
The law of demand states that the quantity of a good demanded varies ----------
The law of demand states that the quantity of a good demanded varies ----------
The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of --------------
The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of --------------
When the price of a good falls, the income effect for a normal good implies that people buy ----
When the price of a good falls, the income effect for a normal good implies that people buy ----
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Each point on the demand curve reflects --------------------
Each point on the demand curve reflects --------------------
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A substitute is a good -------------------
A substitute is a good -------------------
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Which of the following pairs of goods are most likely substitutes?
Which of the following pairs of goods are most likely substitutes?
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Cupcakes and granola bars are substitutes in consumption. The price of a granola bar increases so the demand for -------------------------
Cupcakes and granola bars are substitutes in consumption. The price of a granola bar increases so the demand for -------------------------
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An increase in the expected future price of a good ------------------------
An increase in the expected future price of a good ------------------------
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If consumers' incomes increase and the demand for bus rides decreases ---------
If consumers' incomes increase and the demand for bus rides decreases ---------
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When income increases, the demand curve for X shifts rightward and the demand curve for Y shifts leftward. These shifts mean that ----------------------
When income increases, the demand curve for X shifts rightward and the demand curve for Y shifts leftward. These shifts mean that ----------------------
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An increase in the number of consumers ---------------
An increase in the number of consumers ---------------
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In figure no.1, which movement reflects an increase in demand?
In figure no.1, which movement reflects an increase in demand?
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In figure no.1, which movement reflects a decrease in demand?
In figure no.1, which movement reflects a decrease in demand?
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In figure no.1, which movement reflects a decrease in quantity demanded but NOT a decrease in demand?
In figure no.1, which movement reflects a decrease in quantity demanded but NOT a decrease in demand?
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Study Notes
Understanding Demand and Supply
- Quantity Demanded: The amount of a good or service that consumers actually buy during a given time period at a given price.
- Law of Demand: The quantity demanded of a good inversely varies with its price, meaning as price increases, quantity demanded decreases.
- Substitution Effect: When the price of a good rises, consumers switch to a substitute good (similar but cheaper), leading to a decrease in the quantity demanded of the original good.
- Income Effect: A decrease in the price of a good increases purchasing power (the real income effect), leading to an increase in the quantity demanded of that good (for normal goods) or a decrease (for inferior goods).
- Demand Curve: A graph showing the relationship between the price of a good and the quantity demanded at each price. Each point on the curve shows the maximum price consumers are willing to pay for that specific unit of the good.
- Substitutes: Goods that can be used in place of one another. Examples: cola and lemon lime soda, DVDs and streaming services.
- Complements: Goods that are consumed together. Examples: peanut butter and jelly, cars and gasoline.
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Shifts in Demand: The entire demand curve shifts due to changes in factors other than the price of the good.
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Increase in Demand: Demand curve shifts rightward, indicating consumers are willing to buy more at any given price. Factors that can cause an increase in demand:
- Lower prices of complementary goods
- Increased consumer income (for normal goods)
- Favorable changes in consumer tastes
- Expected future price increases
- Increased number of consumers
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Decrease in Demand: Demand curve shifts leftward, indicating consumers want to buy less at any given price.
- Higher prices of complementary goods
- Decreased consumer income (for normal goods)
- Unfavorable changes in consumer tastes
- Expected future price decreases
- Decreased number of consumers
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Increase in Demand: Demand curve shifts rightward, indicating consumers are willing to buy more at any given price. Factors that can cause an increase in demand:
- Movement along the Demand Curve: A change in quantity demanded due to a change in the price of the good.
Visualizing Demand
- In Figure no. 1:
- Movement from point a to e represents an increase in demand.
- Movement from point a to d represents a decrease in demand.
- Movement from point a to c represents a decrease in quantity demanded, but not a decrease in demand. This is because the price of the good has changed.
- Decrease in quantity demanded reflects a movement along the demand curve, while a decrease in demand reflects the entire curve shifting leftward.
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Description
Test your knowledge on the fundamental concepts of demand and supply, including quantity demanded, law of demand, and effects on purchasing power. This quiz will cover essential terms and relationships between price and demand. Ideal for students studying economics or related fields.
