Demand: Think Like a Buyer

Question 1

A graph, plotting the quantity of an item that someone plans to buy, at each price.

Answer 1

Individual Demand Curve

Question 2

A commonly used qualifier noting your conclusions may change if some factor that you haven’t analyzed changes. (In Latin, it’s ceteris paribus.)

Answer 2

“Holding Other Things Constant”

Question 3

The tendency for quantity demanded to be higher when the price is lower.

Answer 3

Law of Demand

Question 4

A price change causes movement from one point on a fixed demand curve to another point on the same curve.

Answer 4

Movement Along the Demand Curvr

Question 5

The change in quantity associated with movement along a fixed demand curve.

Answer 5

Change in the Quantity Demanded

Question 6

A movement of the demand curve itself.

Answer 6

Shift in Demand Curve

Question 7

A shift of the demand curve to the right.

Answer 7

Increase in Demand

Question 8

1. Income
2. Preferences
3. Prices of related goods
4. Expectations
5. Congestion and network effects 6. The type and number of buyers
   . . . but not a change in price.

Answer 8

Six Factors Shift the Market Demand Curve

Question 9

A good for which higher income causes an increase in demand.

Answer 9

Normal Good

Question 10

A good for which higher income causes a decrease in demand.

Answer 10

Inferior Good

Question 11

Goods that go together. Your demand for a good will decrease if the price of a complementary good rises.

Answer 11

Complementary Goods

Question 12

Goods that replace each other. Your demand for a good will increase if the price of a substitute good rises.

Answer 12

Substitute Goods

Question 13

When a good becomes more useful because other people use it. If more people buy such a good, your demand for it will also increase.

Answer 13

Network Effect

Question 14

When a good becomes less valuable because other people use it. If more people buy such a product, your demand for it will decrease.

Answer 14

Congestion Effect

Question 15

PEPTIC:
Preferences
Expectation
Price of related goods
Type and number of buyers
Income
Congestion and network effects

Answer 15

Things that Shift the Demand Curve Area

Question 16

Higher income increases the demand for normal goods, but decreases the demand for inferior goods.

Answer 16

Income

Question 17

Demand for particular
goods can increase or decrease as your desire for those goods change. Can be changed by trends, advertising, changing lifestyles, and countless other factors. Advertisers will try to increase your demand for their products. Social pressure can also shift demand curves.

Answer 17

Preferences

Question 18

Demand will increase if the price of substitute goods rises, or the price of complementary goods falls. Demand will decrease if the price of substitute goods falls, or the price of complementary goods rises.

Answer 18

Prices of Related Goods

Question 19

If prices are expected to rise, today’s demand will increase; if prices are expected to fall, today’s demand will decrease.

Answer 19

Expectations

Question 20

If a good with network effects becomes more popular, demand will increase. If a good with congestion effects becomes more popular, demand will decrease.

Answer 20

Congestion & Network Effects

Question 21

Demand will increase due to population growth, immigration, or access to new international markets. Demographic change can also shift demand. This factor only affects market demand curves, not individual demand.

Answer 21

Type & Number if Buyers