Micro CH 3
According to the law of demand, there is an inverse relationship between price and quantity demanded. That is, the demand curve for goods and services slopes downward. Why?
When the price of a good increases, consumers' purchasing power falls, and they cannot buy as much of the good as they did prior to the price change.
The distinction between substitutes and complements is
substitute goods are used for the same purposes while complementary goods are used together.su
According to the law of demand
there is an inverse relationship between price and quantity demanded.
The distinction between a normal and an inferior good is
when income increases, demand for a nornal good increases while demand for an inferior good falls
"An increase in supply decreases the equilibrium price. The decrease in price increases demand."
false: decreases in price affect the quantity demanded, not demand.
A perfectly competitive market is a market that meets the conditions of
(1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market.
Consider the figure to the right and assume that it is the market for health-care services. When the "baby boomer" generation retires, the number of people who require health care increases by 30%, and, as a result, the number of health-care providers also increases, but by only 25%.
It increases because demand increased by more than supply.It
According to the law of supply,
as the price of a productas increases, firms will supply more of it to the market. AND there is a positive relationship between price and quantity supplied.th
