ScienceEconomicsEcon chapter 4 example #2198
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Econ chapter 4 example #2198

Caleb Taylor avatar Caleb Taylor
1 June 2024
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question
How does the price range affect the elasticity of demand for a product?
answer
Demand for a good can be inelastic at a low price, but elastic at a high price
question
If prices rise, but income stays the same, what is the effect on the quantity demanded?
answer
The quantity of demand decreases
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What effect does the availability of many substitutes have on the elasticity of demand for a good?
answer
Demand is elastic
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If prices rise, but income stays the same, what is the effect on demand?
answer
Fewer goods are bought
question
Why is the demand for milk elastic?
answer
Milk is a necessity, not a luxury.
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How can expectations about the future change consumer behavior?
answer
Immediate demand for a good will rise if it's price is expected to rise.
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How can the demand for one good be affected by increased demand for another one?
answer
If goods are used together, increased demand for one will increase demand for the other.
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Which of the following will happen if the price of butter goes up?
answer
You can buy a substitute and the quantity of demand for butter will decrease
question
Why does an economist create a market demand schedule?
answer
to predict how people will change their buying habits when prices change
question
What does it mean when you have demand for a good or service?
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You are willing and able to buy the good at the given price
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Economists say that a demand curve is accurate only as long as the ceteris paribus assumption is true. This means that
answer
All things other than price hold constant
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How does the substitution effect work when the price of an item drops?
answer
Consumers buy the item as a substitute for other things
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How does increase population affect demand?
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The demand for goods will increase- demand curve will move to the right
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How does a person's perception of a good as a necessity or a luxury affect his or her purchase of it?
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A good that is perceived as a necessity will be purchased even if the prices rises.
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What does elasticity of demand measure?
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how buyers will cut back or increase their demand when price rises or falls
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How does elasticity affect a company 's pricing policy?
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If demand is elastic at the current price, the company knows that an increase price would reduce total revenues
question
How might advertising lead. To a shift in the demand curve?
answer
By helping to create fads and trends