Chap 2

Question 1

what is demand ?

Answer 1

demand refers to various quantities of goods
and/or services that a consumer is willing and able to purchase at a given price during a particular time, given other things unchanged

Question 2

what does the law of demand say ?

Answer 2

It states that when the price of a commodity and its quantity demanded are inversely related

Question 3

what’s a demand schedule ?

Answer 3

its the combination of the list of a commodity’s price and quantity in the form of a table.

Question 4

What’s a demand curve ?

Answer 4

Its a graphical representation of the relationship
between different quantities of a commodity demanded by an individual at different prices per time period.

Question 5

Whats demand function and the formula?

Answer 5

its a mathematical relationship between price and
quantity demanded, all other things remaining the same.
Qd= f(P)

Question 6

Whats market demand?

Answer 6

It refers to the sum of the quantity demanded for the product by all buyers at each price.

Question 7

What are the 2 factors that determine the demand for a good?

Answer 7

1. price factor
2. Non price factor

Question 8

What are the 5 non price factors ?

Answer 8

1. taste or preference
2. income demand
3. cross demand
4. consumer expectation of the price
5. nbr of buyers in the market

Question 9

whats Movement along demand curve

Answer 9

it means that a fall or raise price leads to a raise or fall in quantity demanded

Question 10

whats a shift in the demand curve ?

Answer 10

it occurs due to other factors rather than the price of a given commodity

Question 11

Define Elasticity

Answer 11

its a measure of responsiveness of a dependent variable to changes in an independent variable

Question 12

what is Elasticity of demand ?

Answer 12

it refers to the change in the quantity demanded of a good to a change in its price, change in income, or change in prices of related goods.

Question 13

what are the 3 kinds of demand elasticity ?

Answer 13

1. Price elasticity
2. income elasticity
3. cross elasticity

Question 14

what does price elasticity mean?
what’s the formula of price elasticity of demand ?

Answer 14

it means how much demand will change when price changes.
% change in Qd / % change in price

Question 15

What is Arc elasticity ?
What’s the formula of arc elasticity of demand ?

Answer 15

Its the old and new price and quantity
Ed = (change in Qd / OG Q ) / (change in P/OG p )

Question 16

What are the determinants of price elasticity of demand ?

Answer 16

1. Availability of substitutes
2. Time
3. the proportion of income consumers spend for a product
4. the importance of the commodity in the consumers budget

Question 17

whats income elasticity of demand ?

Answer 17

Its a measure of the change in quantity demand to changes in income while all other things are constant.

Question 18

How is the income elasticity of normal goods and inferior goods?

Answer 18

the income elasticity of normal goods is positive
for inferior goods its negative

Question 19

Cross price Elasticity of demand

Answer 19

How much a commodity is demanded when there is a change in the prices of other commodities

Question 20

How is the cross price elasticity of demand for substitute goods
complementary goods
unrelated goods

Answer 20

substitute goods : positive
complementary goods : negative
unrelated goods : zero

Question 21

What is supply ?

Answer 21

Supply indicates the quantity of products that sellers are able and willing to provide at different prices.

Question 22

what does the law of supply say?

Answer 22

it states that as the price of the product increases the quantity supplied also increases.

Question 23

what is market supply?

Answer 23

it is the sum of the quantity supplied of the product by all sellers at each price.

Question 24

What is elasticity of supply?
what is the formula of elasticity of supply?

Answer 24

it is how much supply will be change when price changes
Es = %change in quantity supplied / %change in price

Question 25

what are the different type of price elasticity?

Answer 25

elastic
inelastic
unitary elastic
perfectly elastic
perfectly inelastic

Question 26

what does elasticity of supply depend on?

Answer 26

1.the costs of production
2.time involved
3.excess capacity and unsold stocks

Question 27

Whats a market equilibrim?

Answer 27

Market equilibrium occurs when market demand equals market supply.

Question 28

what is maximum price fixation

Answer 28

it is the max price fixed by the gouv , because there is more demand than supply and it could lead to a shortage

Question 29

what is minimum price fixation ?

Answer 29

it is the min price fixed by the gouv because there is less demand than supply and it could lead to a surplus.