2.1. Theory of Demand Flashcards
The _ for a commodity is the quantity that consumers are able and willing to buy at various prices during a given period of time.
demand
_ means the ability and willingness to buy a specific quantity of a commodity at the prevailing price in a given period of time.
Demand
_ for a commodity implies a desire to acquire it, along with the willingness and ability to pay for it.
Demand
Demand = _ + _
Willingness to buy, Ability to pay
Demand could be expressed in the form of _, _, or _.
functions, schedules or curves
_ is expressed in function form [Q = f (P)] as quantity is function of price, or these variables are expressed in tabular form/ schedules, and can be transformed into curves.
Demand
Demand is expressed in function form [Q = f (P)] as quantity is _.
function of price
Demand is expressed in function form [Q = f (P)] as quantity is function of price, or these variables are expressed in _.
tabular form/ schedules
Demand is expressed in function form [Q = f (P)] as quantity is function of price, or these variables are expressed in tabular form/ schedules, and can be transformed into _.
curves
Demand is expressed in function form [Q = f (P)] as quantity is _, or these variables are expressed in _, and can be transformed into _.
function of price, tabular form/ schedules and curves
A _ can be constructed for any commodity if the list of prices and quantities purchased at those prices are known.
demand schedule
A demand schedule can be constructed for any commodity if the _ and _ are known.
list of prices, quantities purchased at those prices
A _ is a curve that represents the relationship between the quantity of the good chosen by a consumer and the price of the good.
demand curve
A demand curve is a curve that represents the relationship between the _ of the good chosen by a consumer and the _ of the good
quantity, price
The independent variable (price) is measured along the _ axis.
vertical
The dependent variable (quantity) is measured along the _ axis.
horizontal
The _ variable (_) is measured along the vertical axis
independent, price
The _ variable (_) is measured along the horizontal axis.
dependent, quantity
The _ shows the quantity demanded by the consumer at each price.
demand curve
The demand curve shows the _ demanded by the consumer at each price.
quantity
_ shows how the quantity demanded of a good changes as its price varies, ceteris paribus.
Demand schedule
Because a lower price increases the quantity demanded, the demand curve slopes _.
downward
_: the law of demand states quantity and price are inversely related: quantity demanded of a good (X) goes up when its price goes down.
The slope of a demand curve
The slope of a demand curve: _ states quantity and price are inversely related.
the law of demand
The function of demand has a _ slope, or the curve slopes _.
negative, downward
This important property where the slope of a demand function is negative is given the name of _.
downward sloping demand
_ can be stated as, all other things remaining constant, the quantity demanded of a commodity increases when its price decreases and decreases
when its price increases.
The law of demand
_ are factors that cause the consumer to increase or decrease their demand for a particular commodity.
Determinants of demand
_ is a multi-variety function in a sense that it is determined by many factors/variables.
Demand
List the factors affecting the demand for a commodity.
- Price of the good
- Price of related goods
- Consumer income
- Taste and habits:
- Population
- Season
- Consumer’s future price expectation
_ is an important determinant of demand.
The price of a commodity
Price and demand are _ related.
inversely
The price of related goods like _ and _ goods also affect the demand.
substitutes, complementary
_ are goods that can be used in place of each other to satisfy a given want.
Substitute goods
_ are goods used together to satisfy a given want.
Complementary goods
In the case of substitutes, rise in the price of one commodity leads to _ in the demand for its substitute.
an increase
In the case of complementary goods, a _ in the price of one commodity leads to a rise in demand for both the goods.
fall/decrease
_ is directly related to demand.
Consumer income
T/F
A change in the consumer’s income slightly influences his demand for most commodities.
False, it significantly influences it
If the consumers’ income increases, demand will be _.
greater
_ these are very effective factors affecting demand for a commodity.
Taste and habits
T/F
When there is a change in the consumer’s taste, habits, or preferences, their demand will stay the same.
False
If the size of the population is greater, demand for goods will be _.
greater
T/F
The market demand for a commodity substantially changes when there is a change in the total population.
True
If a consumer expects prices to rise in the future, he may buy _ at the current price, and thus his/her demand _.
more, rises
Other things being equal, _ designates the movement from one point to another point from one price quantity combination to another on a fixed demand schedule or demand curve.
Change in quantity demanded
The cause of change in quantity demanded is an increase or decrease in the price of the product being considered.
