Revise later
SpaceTo flip
If confident
All Flashcards
On a demand curve, what does a movement along the curve represent?
A change in quantity demanded due to a change in price.
On a demand curve, what does a shift of the entire curve represent?
A change in demand due to a change in a determinant of demand (INSECT).
If the demand curve shifts to the right, what does this indicate?
An increase in demand.
If the demand curve shifts to the left, what does this indicate?
A decrease in demand.
How would you graphically represent the effect of an increase in income (for a normal good) on the demand curve?
Shift the demand curve to the right.
How would you graphically represent the effect of an increase in the price of a complement on the demand curve?
Shift the demand curve to the left.
How would you graphically represent the effect of a decrease in the price of a substitute on the demand curve?
Shift the demand curve to the left.
How would you graphically represent the effect of an expected future price decrease on the current demand curve?
Shift the demand curve to the left.
How does a change in consumer tastes, favoring a product, affect the demand curve?
The demand curve shifts to the right.
How does a change in number of buyers, increasing the number of consumers, affect the demand curve?
The demand curve shifts to the right.
How does an increase in consumer income affect the demand for luxury cars?
Luxury cars are typically normal goods, so demand increases, shifting the demand curve to the right.
How does a decrease in the price of gasoline affect the demand for SUVs?
Gasoline and SUVs are complements. A decrease in gasoline price increases the demand for SUVs, shifting the demand curve to the right.
If the price of coffee increases significantly, what happens to the demand for tea?
Coffee and tea are substitutes. The demand for tea increases, shifting the demand curve to the right.
If consumers expect the price of a new gaming console to rise sharply next month, what happens to its current demand?
Current demand increases as consumers buy now to avoid higher future prices, shifting the demand curve to the right.
How does a widespread advertising campaign promoting the health benefits of a particular fruit affect its demand?
The demand for the fruit increases due to changed tastes/preferences, shifting the demand curve to the right.
If a new apartment complex opens in a city, how does this affect the demand for groceries?
The number of buyers increases, so the demand for groceries increases, shifting the demand curve to the right.
How does an increase in the price of peanut butter affect the demand for jelly?
Peanut butter and jelly are complements, so the demand for jelly decreases, shifting the demand curve to the left.
How does a recession (decrease in income) affect the demand for instant noodles?
Instant noodles are often an inferior good, so demand increases, shifting the demand curve to the right.
If a popular social media influencer stops promoting a certain brand of clothing, what happens to its demand?
Tastes/preferences decrease, so the demand for the clothing decreases, shifting the demand curve to the left.
How does the introduction of a cheaper, equally functional alternative affect the demand for a premium product?
Demand for the premium product decreases as consumers switch to the substitute, shifting the demand curve to the left.
What is 'demand' in economics?
The willingness and ability of consumers to purchase a good or service at various prices.
What is 'quantity demanded'?
A specific amount of a good or service consumers are willing and able to purchase at a particular price.
What is the 'Law of Demand'?
The inverse relationship between price and quantity demanded: as price increases, quantity demanded decreases, and vice versa.
Define 'normal good'.
A good for which demand increases as consumer income increases.
Define 'inferior good'.
A good for which demand decreases as consumer income increases.
Define 'substitute goods'.
Goods that can be used in place of one another; if the price of one increases, the demand for the other increases.
Define 'complement goods'.
Goods that are used together; if the price of one increases, the demand for the other decreases.
What is meant by 'change in demand'?
A shift of the entire demand curve, caused by factors other than price.
What is meant by 'change in quantity demanded'?
A movement along the demand curve, caused only by a change in the price of the good.
Define 'equilibrium price'.
The price at which the quantity demanded equals the quantity supplied.