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Economics chapter 3
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Economics chapter 3

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  • some parts of the world that were formerly poor have become more prosperous because they possess natural resources that are in high demand in other parts of the world. can you describe five countries or regions that have been enriched by extracting such raw materials?
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  • 1. Economics Chapter 3 Demand 3.1, 3.2, 3.3
  • 2. How does demand differ from thequantity demanded?• Demand is at various prices while quantity demanded is at one particular price.• Demand: the consumer is willing AND able to buy the product and the demand for the product must be examined over a certain time frame.
  • 3. What does the law of demand state?• The relationship between the quantity demanded and the price is inverse. ▫ Price is up, quantity demanded is down ▫ Price is down, quantity demanded is up.
  • 4. What do demand schedules anddemand curves illustrate?• They show the relationship between price and quantity demanded.• Demand schedule: shows various prices in a certain amount of time to get the price at which the most profit is earned.• Demand curves: plots the information on a graph.
  • 5. What does it mean for a productsdemand to shift?• It means there was a change in any determinant of demand.• Makes the graph shift left or right.
  • 6. What factors can shift demand for aproduct?• Consumer tastes and preferences,• Market size,• Income,• Prices of related goods, and• consumer expectations.
  • 7. How do substitute goods differ fromcomplementary goods?• Complementary goods are used with other goods, ex. Chocolate syrup and milk.• Substitute goods are substitutes for the real thing (usually at a cheaper price.) “the store brand”
  • 8. What is demand elasticity?• The degree to which changes in a goods price affect the quantity demanded by consumers. ▫ Like a rubber band: you pull back harder, the band swings back into place harder.
  • 9. What is the difference between elasticand inelastic demand?• Elastic demand: when the demands price change leads to a significant change in quantity demanded.• Inelastic demand: the opposite. The demands price has little effect on its change in quantity demanded.• The difference is the effect of the price on the good.
  • 10. How is elasticity of demand measured?• The total revenue test: (total receipts) monitoring any changes in a markets revenue before and after changes in price of a product.
  • 11. Credits• Picture:"E101ch910." E101ch910. N.p., n.d. Web. 24 Aug.2012.<http://www.oswego.edu/~atri/e101ch910.html>.• Information:Pennington, Robert Leroy. Holt Economics.Austin,Texas: Holt, Rinehart and Winston, 2003.Print.