Economics chapter 3

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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.<>.• Information:Pennington, Robert Leroy. Holt Economics.Austin,Texas: Holt, Rinehart and Winston, 2003.Print.