Chapter 3 Lecture 7

Question 1

What is buyers behaviour governed by?

Answer 1

The law of demand

Question 2

What is sellers behaviour controlled by?

Answer 2

The law of supply

Question 3

What are 2 central issues of the theory of demand

Answer 3

1) why consumers change their demand for a commodity
2) why quantity demanded is negatively related to price

Question 4

Definition of demand for economists

Answer 4

Desires and wishes that are back by a willingness to pay and ability to pay a reasonable price

Question 5

What is a demand schedule or a demand curve

Answer 5

A table reflecting demand showing quantities of a commodity that consumers are willing to buy at related prices over a given time period

Question 6

What are the 4 main types of demand?

Answer 6

1) individual demand
2) market demand
3) complementary demand
4) competitive demand

Question 7

6 Factors that determine demand

Answer 7

1) change in price
2) income
3) tastes
4) number of buyers
5) expectations about future prices and incomes
6) prices of other goods including substitutes and completmentary products

Question 8

What is the law of demand?

Answer 8

Implies that with other factors remaining the same, there is an inverse relationship between quantity demanded and price

Question 9

What are the 4 chief property of a demand curve

Answer 9

1) they are negatively sloped
2) a linear demand curve has a constant slope
3) a demand line is constituted by an array of all points located on the curve
4) buyers move along a demand line in response to a change in price only

Question 10

2 factors explaining why a demand curve is negatively sloped

Answer 10

1) income effect
2) substitution effect