Summary
Summary economics - demand
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Law of Demand,ceteris paribus, demand curve, income effect, substitution efffect.
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Economics Demand - 10 questions
Flashcards
10 Flashcards
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Flashcards
10 Flashcards
$3.26
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Some examples from this set of practice questions
1.
What is the income effect?
Answer: Change of consumption based on income.
2.
What is substitution effect?
Answer: An decrease in sales for a product that can be attributed to consumers switching to cheaper alternatives when the price of the product rises
3.
What are the 5 major factors for a shift in the supply curve?
Answer: 1. Income 2. Trends 3. Price 4. Expectations of the product or service 5. Population size
4.
What is ceteris paribus?
Answer: All other things will stay the same or stay equal
5.
What causes an shift to the right in the demand curve?
Answer: An increase in demand, such as an promotion on an product
Content preview
Economics – DemandThe Law of Demand
The law of demand is the higher the price, the less quantity will be sold of this product or service.
And the lower the price, the greater quantity will be demanded.
For example:
If you have an coffee for €5,00 less people will buy the coffee compared to an €2,50 coffee.
For this law of demand there is the demand curve
The demand curve has an couple assumptions: Demand curve
- Ceteris paribus
5
- A time period
4
3
Ceteris Paribus
2
This means that all other things stay equal or stay the same.
1
For example the amount of money people earn will be the same.
0
1 2 3 4
Relationship between demand and price
Demand curve
The relationship between demand and price is depending on
- The law of demand
- The income effect
- The substitution effect
Then there are also other determinants of demand
- The number and price of substitute goods
- The number and price of complementary goods
- Tastes of people
- Incomes
- Expectations of the product or service
These factors all determine how much or how little demand there is for the product or service.
There can also be movement along the demand curve or
an shift in the demand curve.
Upwards is more less demand for the product
Downwards is more demand for the product
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