2.1. Theory of Demand

Question 1

The _ for a commodity is the quantity that consumers are able and willing to buy at various prices during a given period of time.

Answer 1

demand

Question 2

_ means the ability and willingness to buy a specific quantity of a commodity at the prevailing price in a given period of time.

Answer 2

Demand

Question 3

_ for a commodity implies a desire to acquire it, along with the willingness and ability to pay for it.

Answer 3

Demand

Question 4

Demand = _ + _

Answer 4

Willingness to buy, Ability to pay

Question 5

Demand could be expressed in the form of _, _, or _.

Answer 5

functions, schedules or curves

Question 6

_ 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.

Answer 6

Demand

Question 7

Demand is expressed in function form [Q = f (P)] as quantity is _.

Answer 7

function of price

Question 8

Demand is expressed in function form [Q = f (P)] as quantity is function of price, or these variables are expressed in _.

Answer 8

tabular form/ schedules

Question 9

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 _.

Answer 9

curves

Question 10

Demand is expressed in function form [Q = f (P)] as quantity is _, or these variables are expressed in _, and can be transformed into _.

Answer 10

function of price, tabular form/ schedules and curves

Question 11

A _ can be constructed for any commodity if the list of prices and quantities purchased at those prices are known.

Answer 11

demand schedule

Question 12

A demand schedule can be constructed for any commodity if the _ and _ are known.

Answer 12

list of prices, quantities purchased at those prices

Question 13

A _ is a curve that represents the relationship between the quantity of the good chosen by a consumer and the price of the good.

Answer 13

demand curve

Question 14

A demand curve is a curve that represents the relationship between the _ of the good chosen by a consumer and the _ of the good

Answer 14

quantity, price

Question 15

The independent variable (price) is measured along the _ axis.

Answer 15

vertical

Question 16

The dependent variable (quantity) is measured along the _ axis.

Answer 16

horizontal

Question 17

The _ variable (_) is measured along the vertical axis

Answer 17

independent, price

Question 18

The _ variable (_) is measured along the horizontal axis.

Answer 18

dependent, quantity

Question 19

The _ shows the quantity demanded by the consumer at each price.

Answer 19

demand curve

Question 20

The demand curve shows the _ demanded by the consumer at each price.

Answer 20

quantity

Question 21

_ shows how the quantity demanded of a good changes as its price varies, ceteris paribus.

Answer 21

Demand schedule

Question 22

Because a lower price increases the quantity demanded, the demand curve slopes _.

Answer 22

downward

Question 23

_: the law of demand states quantity and price are inversely related: quantity demanded of a good (X) goes up when its price goes down.

Answer 23

The slope of a demand curve

Question 24

The slope of a demand curve: _ states quantity and price are inversely related.

Answer 24

the law of demand

Question 25

The function of demand has a _ slope, or the curve slopes _.

Answer 25

negative, downward

Question 26

This important property where the slope of a demand function is negative is given the name of _.

Answer 26

downward sloping demand

Question 27

_ 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.

Answer 27

The law of demand

Question 28

_ are factors that cause the consumer to increase or decrease their demand for a particular commodity.

Answer 28

Determinants of demand

Question 29

_ is a multi-variety function in a sense that it is determined by many factors/variables.

Answer 29

Demand

Question 30

List the factors affecting the demand for a commodity.

Answer 30

• Price of the good
• Price of related goods
• Consumer income
• Taste and habits:
• Population
• Season
• Consumer’s future price expectation

Question 31

_ is an important determinant of demand.

Answer 31

The price of a commodity

Question 32

Price and demand are _ related.

Answer 32

inversely

Question 33

The price of related goods like _ and _ goods also affect the demand.

Answer 33

substitutes, complementary

Question 34

_ are goods that can be used in place of each other to satisfy a given want.

Answer 34

Substitute goods

Question 35

_ are goods used together to satisfy a given want.

Answer 35

Complementary goods

Question 36

In the case of substitutes, rise in the price of one commodity leads to _ in the demand for its substitute.

Answer 36

an increase

Question 37

In the case of complementary goods, a _ in the price of one commodity leads to a rise in demand for both the goods.

Answer 37

fall/decrease

Question 38

_ is directly related to demand.

Answer 38

Consumer income

Question 39

T/F
A change in the consumer’s income slightly influences his demand for most commodities.

Answer 39

False, it significantly influences it

Question 40

If the consumers’ income increases, demand will be _.

Answer 40

greater

Question 41

_ these are very effective factors affecting demand for a commodity.

Answer 41

Taste and habits

Question 42

T/F
When there is a change in the consumer’s taste, habits, or preferences, their demand will stay the same.

Answer 42

False

Question 43

If the size of the population is greater, demand for goods will be _.

Answer 43

greater

Question 44

T/F
The market demand for a commodity substantially changes when there is a change in the total population.

Answer 44

True

Question 45

If a consumer expects prices to rise in the future, he may buy _ at the current price, and thus his/her demand _.

Answer 45

more, rises

Question 46

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.

Answer 46

Change in quantity demanded

Question 47

The cause of change in quantity demanded is an increase or decrease in the price of the product being considered.