Demand Curve

Question 1

What is a ‘demand curve’?

Answer 1

It’s a line drawn on a graph that shows how much of a good will be bought at different prices

Question 2

What’s a ‘demand schedule’?

Answer 2

• It’s a table of the quantity demanded of a good at different price levels
• can be used to calculate the expected quantity demanded

Question 3

What does the term ‘effective demand’ mean?

Answer 3

Amount of the good people are willing to buy at given prices over a given period of time supported by the ability to pay

Question 4

What is an ‘inverse relationship’?

Answer 4

(Between price and quantity demanded) when the price goes up, the quantity demanded falls and when the price goes down the quantity demanded rises

Question 5

What’s a ‘shift in the demand curve’?

Answer 5

Movement to the left or right of the entire demand curve when there is a change in any factor affecting demand except the price

Question 6

How does a change in income affect the demand curve?

Answer 6

A change in income can cause the demand curve to shift either left (decrease in income) or right (increase in income).

Question 7

How does a movement along the demand curve differ from a shift in the demand curve?

Answer 7

A movement along the demand curve occurs due to a change in price, while a shift in the demand curve occurs due to changes in factors other than price, such as income.

Question 8

How does a decrease in the price of a product affect the demand curve?

Answer 8

A decrease in the price of a product leads to a movement down (to the right) along the demand curve, indicating an expansion in quantity demanded.