chapter2

Question 1

law of demand

Answer 1

quantity demanded has an inverse relationship with price
P increase then D fall

Question 2

demand
(want is not a demand)

Answer 2

the quantity of a product that a customer is willing and able to purchase at a certain price

Question 3

Diminishing Personal Value and Diminishing Marginal Utility

Answer 3

Experience means less over time
ex: listening to a song too much

Question 4

Marginal Utility

Answer 4

As people gain more of a product, they desire more of that product less
ex: jumbo roll of paper towels

Question 5

elastic demand

Answer 5

• Any price changes will have a great effect on the demand for that product
• Usually a product with plentiful substitutes or a product that most people can usually go without

Question 6

inelastic demand

Answer 6

• Price changes will have a small effect on the demand for the product
• Usually a product without realistic substitutes or a product that people must have to go about their daily lives
• Longer high prices stay, more drastic changes (car –> EV car)

Question 7

Price elasticity & law of demand

Answer 7

Price elasticity does not void the Law of Demand, as all products, no matter how inelastic, will face at least some decrease in demand as prices rise, especially over time

Question 8

What affects Demand (SCWNS)

Answer 8

1. Prices and Availability of Substitutes
2. Prices and Availability of Complementary Goods
3. Changes in weather or season
4. Change in Number of Buyers
5. Changes in Styles, Tastes, and Habits

Question 9

1. Prices and Availability of Substitutes
   ex: As chicken goes up, pork/turkey also goes up

Answer 9

• If the price for something rises, then the demand for a substitute of that product will rise
• The demand for a product will fall if a new, cheaper, substitute for that product hits the market

Question 10

2. Prices and Availability of Complementary Goods

Answer 10

• Complementary good is something that is usually purchased along with a product
• If there is a sale on a complementary good, then demand for the complementary good will rise
  -ex: hot dog sale, hot dog buns sell

Question 11

3. Changes in weather/season

Answer 11

• Certain times of the year, demand for certain products will rise
• Ex: Holiday=wrapping paper, summer=swimsuits
• Smart: purchase products at the end of their season when demand is low

Question 12

4. Change in number of buyers

Answer 12

If population rises or falls, or a new ethnic group becomes a major part of the population, demand for certain products will change

Question 13

5. Changes in Styles, Tastes, and Habits

Answer 13

-As fads grow, demand can rise exponentially, then fall just as fast as fads fade
- ex: fidget spinners

Question 14

6. Changes in Expectations

Answer 14

If people expect prices of a product to rise in the future, demand for those products will rise in the present

Question 15

The law of supply

Answer 15

as prices rise, products will always want to sell more at that price. If prices fall, producers will want to produce less

Question 16

supply definition

Answer 16

he quantity of a product that producers are willing and able to sell at a certain price.

Question 17

Market Price

Answer 17

the point where the demand and supply lines cross

Question 18

supply and price relationship

Answer 18

direct

Question 19

demand and price relationship

Answer 19

indirect

Question 20

check out DLTR