Demand

Question 1

How is price determined?

Answer 1

Supply + Demand

Question 2

Define demand?

Answer 2

Desire, willingness and ability to acquire a commodity

Question 3

What is a demand schedule?

Answer 3

Demand schedule shows the quantity of a good or service that will be demanded at various prices

Question 4

T/F: The quantity demanded and price are inversely related?

Answer 4

TRUE!!

More of a good or service will be demanded at a lower price than at a higher price

Question 5

The demand curve is upward sloping or downward sloping?

Answer 5

DOWNWARD

DOUBLE D

Question 6

What two factors cause the negative slope demand curve?

Answer 6

1) INCOME EFFECT- individuals can purchase more units at a lower price
2) SUBSTITUTION EFFECT- lower priced items will be purchased as substitutes for higher priced items

Question 7

What is the market demand curve?

Answer 7

It is simply a SUM OF INDIVIDUAL DEMAND CURVES

Question 8

Movement along the quantity are only impacted by?

Answer 8

PRICE

Question 9

What is a change in demand? What causes it?

Answer 9

SHIFT in demand curve which is caused by:

• Factors OTHER THAN PRICE:
• Size of the market
• Wealth of buyers
• Price of other goods
• Buyer preference

Question 10

What are two factors of note that influence change in demand?

Answer 10

NUMBER 1:

• Change in price of substitute commodity: Substitute commodity satisfies same basic purpose as the commodity of concern
• Price of substitute commodity and demand for commodity of concern move in the same direction

NUMBER 2:

• Price of complementary commodity
• Complementary commodity is used jointly with commodity of concern
• Price of complementary commodity and demand for commodity of concern move in OPPOSITE DIRECTIONS

Question 11

What is the difference between a CHANGE IN QUANTITY DEMANDED and CHANGE IN DAMAND?

Answer 11

Change in quantity demanded- movement along a demand curve as a result of a CHANGE IN PRICE ONLY.

Change in demand: Shifts that result from factors other than price.

• Increase in demand- Shifts right and upward
• Decrease in demand- shifts left and downward