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
