Demand

Question 1

An institution of arrangement which brings together buyers and sellers of related goods, services and or resources to do business with each other

Answer 1

Market

Question 2

Consumers, Businesses, and Government are..

Answer 2

Market Participants

Question 3

___ are trying to obtain the maximum return from the scarce resources they have.

Answer 3

Market Participants

Question 4

A market that has many buyers and many sellers so no single buyer or seller can influence there price.

Answer 4

Competitive Market

Question 5

the ration of its money price to the money price of the next best alternative good –is its opportunity cost

Answer 5

relative price

Question 6

Various amounts of a product or service consumers are willing and able to purchase at each possible price during a specified period of time
Desire + Ability and willingness to pay

Answer 6

Demand

Question 7

A good or service is the amount that consumers plan to buy during a given time period at a particular price.

Answer 7

quantity demanded

Question 8

Shows the relationship between the quantity demanded of a good and its price

• shows the extent and intensity of Demand
• the smaller the quantity available, the higher is the price that someone is willing to pay for another unit.

Answer 8

Demand curve

Question 9

lists of quantities demanded at each different price

Answer 9

Demand schedule

Question 10

Each of us has a demand for a good or service if we are willing and able to pay for it.
The amount we buy depends on its price.
–if the price goes up, we buy less
–if the price goes down, we buy more

Answer 10

Individual Demand

Question 11

The collective summation of all buyers’ individual demands

Answer 11

Market Demand

Question 12

As a price falls, quantity demanded rises and vice versa

Shows the inverse relationship between price and demand

Answer 12

Law of Demand

Question 13

Things that influence demand at each and every price

• number of consumers
• consumer tastes
• consumer income
• price and availability of substitutes
• price of complements
• consumer expectations
• market population

Answer 13

Determinants of demand

Question 14

A good that can be used in place of another good

Answer 14

substitute

Question 15

a good that is used in conjunctive with another good

Answer 15

conjunctive

Question 16

When any factor that influences buying plans other than the price of the good changes, there is a ____.
an increase in demand causes the demand curve to shift rightward.
a decrease in demand caused the demand curve to shift leftward

Answer 16

a Change in demand

Question 17

Taste for the good increases
income increases
price of a substitute rises
price of a complement falls
future prices are expected to rise
number of consumers increases

Answer 17

Demand increases and shift right when these things happen and vise versa

Question 18

A movement along a demand curve, which results from a change in price, shows a ___

Answer 18

Change in quantity demanded

Question 19

If any one of the determinants of demand changes, holding price constant, there is a ___

Answer 19

Change in demand

Question 20

When the price of the good changes and everything else remains the same, there is a ____

Answer 20

quantity demanded and a movement along the demand curve

Question 21

When one of the other factors that influence buying plans changes, there is a

Answer 21

change in demand and a shift of the demand curve

Question 22

Movement along the curve: buyer’s behavior does not change, Buyers only react to a price change
Shift the curve: buyers’ behavior does change

Answer 22

Movements vs Shifts

Question 23

a product whose demand varies directly with income (superior good)
as income increases, the amount of these goods purchased increases

Answer 23

normal good

Question 24

product whose demand varies inversely with money income

as income increases, the amount of a good purchased decreases

Answer 24

inferior good

Question 25

a lower price increases purchasing power of a buyer’s money income, enabling the buyer to purchase more of the product than could be purchased before, and vice versa
Shows impact of a change in price on consumer’s real income and consequently on quantity of product demanded
Decrease in price means more real income is available to bring subsequent amounts of the product and vice versa

Answer 25

income effect

Question 26

household income expressed as the quantity of goods a household can afford to buy

Answer 26

real income

Question 27

at a lower price, buyers have the incentive to substitute the cheaper good for similar good which is relatively more expensive and vise versa
A higher price, substitute good supply is decreased raising prices for the substitute good
Shows impact of a change in product’s price on its expensiveness relative to other substitute products’ prices
higher price for a particular product with no change in price of substitutes means item has become relatively more expensive compared to substitutes

Answer 27

substitution effect

Question 28

When the relative price (opportunity cost) of a good or service rises, people seek substitutes for it, so the quantity demanded decreases.

Answer 28

substitution effect

Question 29

when the price of a good or service rises relative to income, people cannot afford all the things they previously bought, so the quantity demanded decreases

Answer 29

income effect

Question 30

substitution effect contributes to increase quantity demanded because consumer substitutes moreof the good for other goods

Answer 30

normal good - when price declines

Question 31

increases consumer’s ability to buy goods (increasing purchasing power), increasing QD because of income effect

Answer 31

normal good - when price declines

Question 32

consumer’s substitute more of inferior goods for other goods because price decreases relative to them, QD increases because of substitution effect

Answer 32

Inferior good - when price declines

Question 33

lower price effectively makes consumer’s richer but because good is inferior, QD decreases

Answer 33

inferior good - when price declines