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Ch 4 Demand
Spalding Academy 10th Econ
Question | Answer |
---|---|
A relation showing the quantities of a good that consumers are willing and able to buy at various prices per period, other things constant | Demand |
A curve or line showing the quantities of a particular good demanded at various prices during a given time period, other things constant | Demand curve |
Measures how responsive quantity demanded is to a price change; the percentage change in quantity demanded divided by the percentage change in price | Elasticity of demand |
The demand of an individual customer | Individual demanded |
The quantity of a good demanded per period relates inversely to its price, other things constant | Law of demand |
The more of a good a person consumes per period the smaller the increase in total utility from consuming one more unit, other things constant | Law of diminishing marginal utility |
The change in total utility resulting a one-unit change in consumption of a good | Marginal utility |
The sum of the individual demands of all consumers in the market | Market demand |
Change in quantity supplied resulting from a change in the price of the good, other things constant | Movement along a given demand curve |
The amount demanded at a particular price | Quantity demanded |
Increase or decrease in demand resulting from a change in one of the determinants of demand, other things constant | Shift of a demand curve |
Consumer preferences, likes and dislikes in consumption; assumed to be constant along a given demand curve | Tastes |
Price multiplied by the quantity demanded at that price | Total revenue |
Provide an example of a normal good and an inferior good. How does an increase in income affect the demand for each of these goods or services? | Normal: pizza (demand stays same as $$ increases. Inferior: bologna (demand decreases when $$$ increases). |
Provide two examples of the differences in the opportunity cost of time among consumers and how this shapes different consumption patterns. | Making vs. buying pizza, waiting in line at Disney world. More willing to spend $$$ to save time. |
Describe a situation you have encountered that illustrated the law of diminishing marginal utility. | Watching one Lord of the Rings fun, 2nd not so much. 1 slice of pizza OK, 2nd less so |
Leslie has started her own business selling hand-knit scarves, hats, and mitten. She begins advertising in the local newspaper and, as a result, the demand for her products increases. How is the demand curve affected? | Shifts right |
Suppose that Leslie then lowers the price of her scarves from $15 to $10 per scarf. Her sales grow from 25 scarves per week to 50. Calculate the elasticity of demand. | % change in # demand/ % change in price 100/33. 3.3 |
Determine if demand is elastic, unit elastic, or inelastic. Why? | elastic. Elasticity greater than 1.0 |