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Questions and Answers
The demand curve is always positively sloped.
The demand curve is always positively sloped.
False
A shift in the demand curve occurs when there is a change in the price of the good.
A shift in the demand curve occurs when there is a change in the price of the good.
False
The law of demand states that as the price of a good increases, the quantity demanded will also increase.
The law of demand states that as the price of a good increases, the quantity demanded will also increase.
False
The demand curve represents the relationship between the price of a good and the quantity supplied.
The demand curve represents the relationship between the price of a good and the quantity supplied.
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The law of demand assumes that consumers have incomplete information about the market.
The law of demand assumes that consumers have incomplete information about the market.
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A change in consumer preferences will cause a movement along the demand curve.
A change in consumer preferences will cause a movement along the demand curve.
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Study Notes
Demand Curve
- A graphical representation of the relationship between the price of a good and the quantity demanded
- Typically sloping downward, indicating that as the price of a good increases, the quantity demanded decreases
- Can be negatively sloped, positively sloped, or perfectly elastic/inelastic
- Shifts in the demand curve occur when there is a change in:
- Consumer preferences
- Income
- Prices of related goods
- Population or demographics
- Expectations of future price changes
Law of Demand
- States that, ceteris paribus (all other things being equal), as the price of a good increases, the quantity demanded will decrease
- Based on the idea that consumers will:
- Buy more of a good when its price falls
- Buy less of a good when its price rises
- The law of demand assumes that:
- Consumers are rational
- Consumers have complete information about the market
- There are no external factors affecting consumer behavior
- The law of demand is a fundamental principle in microeconomics, used to analyze consumer behavior and understand market trends
Demand Curve
- Graphically represents the relationship between the price of a good and the quantity demanded
- Typically downward sloping, indicating that as the price increases, the quantity demanded decreases
- Can be:
- Negatively sloped
- Positively sloped
- Perfectly elastic
- Perfectly inelastic
- Shifts occur when there is a change in:
- Consumer preferences
- Income
- Prices of related goods
- Population or demographics
- Expectations of future price changes
Law of Demand
- States that, ceteris paribus, as the price of a good increases, the quantity demanded will decrease
- Based on the idea that consumers:
- Buy more when the price falls
- Buy less when the price rises
- Assumes that:
- Consumers are rational
- Consumers have complete information about the market
- There are no external factors affecting consumer behavior
- A fundamental principle in microeconomics, used to:
- Analyze consumer behavior
- Understand market trends
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Description
Test your knowledge of demand curves, including their graphical representation, slopes, and shifts due to various economic factors.
