Supply and Demand: Demand

Demand is the willingness and ability to: buy a given good or service. offer a given good or service. increase the price of a given good or service. decrease the price of a given good or service.

buy a given good or service.

Which of the following is NOT a demand shifter? price of a substitute good consumer taste economic stability price of a complementary good

economic stability

If a change in price causes a relatively large change in the quantity demanded then the demand is __________. elastic fixed inelastic intolerant

elastic

The law of demand states that price and quantity demanded move in __________ directions. similar opposite parallel identical

opposite

A shift in demand may occur within a community in all of the following cases, except a change in __________. birthrate immigration political leadership age demographic

political leadership

(Essay) Explain what is meant by the term demand. What is the law of demand?

Demand is the willingness and ability to buy a given good or service. The law of demand states that the price and quantity demanded move in opposite directions. As the price of a good or service increases the demand is decreased, and when prices decrease the demand will usually rise.

All of the following are examples of complementary goods EXCEPT: cars and tires Pepsi and Coke hot dogs and buns peanut butter and jelly

Pepsi and Coke

(Essay) Define price elasticity of demand. Explain the difference between elastic demand and inelastic demand.

Price elasticity of demand is the difference in quantity demanded compared to the difference in price. Elastic demand differs from inelastic demand in regards to the amount of change in the quantity demanded when a price change occurs. When a relatively large change in quantity demanded results from a price change it is called elastic demand. When a relatively small change in quantity demanded results from a price change it is called inelastic demand.

(Essay) What are substitute goods? Explain how a change in the price of a substitute good can act as a demand shifter.

Substitute goods are goods that are similar in many ways and may be used in place of one another. If the price of a good rises and there is a substitute good available at a lower price, the demand for the substitute good will increase while the demand for the first good will decrease.

(Essay) Describe what is revealed through the law of demand. Explain what the law of demand fails to reveal about the quantity demanded.

The law of demand reveals that a change in price will change the quantity demanded. It also reveals the direction of the change. If prices increase then demand will decrease, and if prices increase then demand will decrease. What the law of demand fails to show is to what extent the quantity will change. The law of demand is not able to reveal whether price changes will affect demand a little or a lot.

(Essay) Explain what is meant by a shift in the demand curve.

When the demand curve shifts it means that there are factors present that have changed the amount of consumer demand for a product or service. When the demand curve moves to the left it means that there is a decrease in the demand, while a move to the right signifies that consumer demand for a good or service has increased.

Price and demand move in the same direction for __________ goods. substitute high-quality complementary government manufactured

complementary

If there is an increase in __________ then there will be an increase in the demand for most goods. consumer price production cost quantity supply consumer income

consumer income

Price elasticity of demand is the difference in the quantity demanded compared to the difference in __________. quantity supplied production cost consumer price quality of the good

consumer price

Positive consumer experience with a good or service tends to result in an increase in all of the following EXCEPT: consumer demand quantity of supply consumer price cost of production

cost of production

A demand __________ is a graphic representation of the law of demand. schedule curve projection model

curve

If the household income is decreased then the demand for most goods will __________. stop increase stay the same decrease

decrease

If business owners want to increase demand for their goods and services, what is the best action for them to take? increase their models increase their projections decrease their prices decrease their quantities

decrease their prices

According to the law of demand, when the price of a good or service increases the quantity demanded __________. stops increases decreases is unchanged

decreases

A demand schedule is used to show the __________. cost of producing a good demand in a given market total value of all demanded goods total value of all goods produced

demand in a given market

If consumers expect the price of a good to increase in the near future then immediate demand for that good will be __________. stopped increased decreased unchanged

increased

If a change in price causes a relatively small change in the quantity demanded then the demand is __________. elastic shifted inelastic controlled

inelastic

A demand __________ is a table that displays the quantity demanded. curve chart scale schedule

schedule

An economic downturn can cause the demand curve to __________. shift to the left shift to the right remain unchanged be a vertical line

shift to the left

Each of the following could be a demand shifter EXCEPT: salary price expectations supplier tastes population

supplier tastes

All of the following are examples of substitute goods EXCEPT: butter and margarine car and motorcycle oil and natural gas toothpaste and toothbrush

toothpaste and toothbrush

Demand is the __________ and __________ to buy a given good or service. passion . . . desire willingness . . . ability need . . . opportunity motivation . . . determination

willingness . . . ability

(Essay) What are complementary goods? Explain how a change in the price of a complementary good can act as a demand shifter.

Complementary goods are goods that are used together, and their demand patterns move in the same direction. Complementary goods are demand shifters because a complementary good will suffer a decline in demand, even without a change in its price, if the item that it complements has a price increase.