Exam code: 0455 & 0987
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Define demand.
Demand is the amount of a good or service that a consumer is willing and able to purchase at a given price in a given time period.
What does a demand curve represent?
A demand curve is a graphical representation of the relationship between the price of a good and the quantity demanded by consumers.
True or False?
A demand curve always appears as a straight line in economic diagrams.
False.
If data were plotted, a demand curve would usually be a true curve, but economists often use straight lines to simplify analysis.
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Define demand.
Demand is the amount of a good or service that a consumer is willing and able to purchase at a given price in a given time period.
What does a demand curve represent?
A demand curve is a graphical representation of the relationship between the price of a good and the quantity demanded by consumers.
True or False?
A demand curve always appears as a straight line in economic diagrams.
False.
If data were plotted, a demand curve would usually be a true curve, but economists often use straight lines to simplify analysis.
Define market demand.
Market demand is the total quantity demanded by all individual consumers for a good or service at each price level.
At a price of $10, if a shop sells 500 units of boys swimwear and 400 units of girls swimwear in July, what is the market demand for swimwear?
The market demand for swimwear at $10 is 900 units, found by adding the demand for boys (500) and girls (400) swimwear.
Define conditions of demand.
The conditions of demand are the non-price factors that cause a shift in the demand curve, such as changes in income, tastes, the prices of related goods, population, and future price expectations.
What happens to the demand curve when a condition of demand changes, but price remains the same?
When a condition of demand changes, the entire demand curve shifts either right (increase in demand) or left (decrease in demand), even though the price stays the same.
When a firm increases its Instagram advertising, the demand for its product (increases/decreases) and the demand curve shifts .
When a firm increases its Instagram advertising, the demand for its product increases and the demand curve shifts right.
Define a movement along the demand curve.
A movement along the demand curve occurs when only price changes, resulting in a different quantity demanded.
True or False?
A contraction in quantity demanded occurs when the price of a good rises.
True.
A contraction in quantity demanded happens when the price increases, causing movement up the demand curve.
According to the law of demand, as the price of a good , the quantity demanded .
According to the law of demand, as the price of a good rises, the quantity demanded falls.
How does an increase in real income affect the demand for most goods and services?
An increase in real income generally leads to an increase in demand for most goods and services, shifting the demand curve to the right.
A decrease in the price of a substitute good will shift the demand curve for the other good to the .
A decrease in the price of a substitute good will shift the demand curve for the other good to the left.
Define complementary goods.
A complementary good is a product that is used together with another good. When demand for one rises, demand for its complement usually rises too.
What is the relationship between the price of a complementary good and the demand for its pair?
There is an inverse relationship between the price of a complementary good and the demand for its pair. As the price of one increases, the demand for the other decreases.
If the population of a country increases, the demand for goods and services will .
If the population of a country increases, the demand for goods and services will increase.
Explain the difference between a movement along the demand curve and a shift of the demand curve.
A movement along the demand curve happens when only price changes, changing quantity demanded. A shift of the demand curve occurs when a condition of demand changes, altering demand at all prices.