The Law of Demand

Question 1

what is demand

Answer 1

the quantity that consumers are willing/able to purchase at a particular time and price

Question 2

what does the law of demand state

Answer 2

describes a negative relationship between price and quantity demanded (as price rises, people buy less)

Question 3

what is the income effect

Answer 3

when prices increases consumers dont buy as much because purchasing power decreases
if price decreases consumers buy more because there is more purchasing power

Question 4

what is the substitution effect

Answer 4

when price of one good rises, substitute goods become more attractive because they’re cheaper.
price decrease, substitute look worse because they’re more expensive

Question 5

does this law have exceptions

Answer 5

there are no exceptions for the law except if a consumer chooses to pay more for the same product which is never gonna happen

Question 6

explain petrol as an example (is it strong or weak)

Answer 6

WEAK: they’re aren’t enough substitutes for petrol if price increases so consumers just have to buy it

Question 7

explain orange juice as an example (is it strong or weak)

Answer 7

STRONGER: many substitutes like apple, if price increases consuers buy cheaper

Question 8

in the demand curve what is the slope and how is price and demand affected

Answer 8

negatively sloped

price increases and demand decreases