ECON chapter 2

Consider the demand for socks. What would cause a movement from one point on the demand curve to a point further down the curve?

A big sale on socks

The demand curve

A diagram showing an inverse relationship between the price and quantity of a good or service illustrating the law of demand

Which of the following would cause a demand curve for ice cream to shift to the right

A rise in the price of popsicles, a substitute for ice cream

Law of demand

As price increases, quantity demanded decreases

What shifts the demand curve?

Buyers preferences, income, and the price of related goods. A change in any of these non-price factors shifts the entire demand curve

Which of the following factors would cause a shift in the demand curve for candles?

Falling incomes, due to a weakening economy

Compliment goods

Goods that buyers like to consumer together like peanut butter and jelly. An increase in the price of PB will decrease the demand for jelly, shifting the demand curve for jelly to the left

The interdependence principle

Implies that buyers decisions are affected by many factors other than the price of an item

What's a scenario that illustrates the law of demand?

Kathleen eats more steak when the price is low, and less when the price is high

Ceteris Parabis

Other conditions remain the same

Substitutes

Soda and juice. An increase in the price of soda encourages buyers to buy more juice, shifting the demand curve for juice to the right

An individual demand curve is a graph:

That plots the quantity of an item that someone plans to buy, at each price

Change in demand

When a demand for a good changes at all prices, as a result from the change in preferences, this is a change in demand and the demand curve shifts rightward or leftward

Diminishing marginal benefit

When buying an additional item yields a smaller marginal benefit than the previous item.

A normal good is

a good for which higher income causes an increase in demand

A rational buyer will keep buying a product until the marginal

benefit equals price

If cream cheese and bagels are complements, then an increase in the prices of cream cheese will ________ the demand for bagels

decrease

Assuming everything else stays the same, an increase in the price of a laptop computers will __________ the ____________ of laptop computers

decrease the quantity demanded

College students often buy cheap pizza because it's more affordable. Suppose after graduating, the college students get high paying jobs. The demand for cheap pizza will likely

decrease, because demand for cheap pizza is negatively related to income

An increase in income with decrease the demand for

inferior goods

A downward sloping demand curve implies there is an ____________ relationship between price and demand

inverse

An increase in income will raise the demand for

normal goods

Quantity demanded is on the horizontal axis when you plot the demand curve and shows

the amount of a good that a person is willing to buy at each price

Paint brushes and paint are complements. If the price of paint rises, we can expect

the demand for paintbrushes to decrease