Demand Flashcards
(7 cards)
What is demand?
Demand refers to the quantity of a good or service that consumers are willing and able to purchase at different prices over a period of time, ceteris paribus (all other factors held constant).
What is the law of demand?
The law of demand states that, all else being equal, as the price of a good or service rises, the quantity demanded decreases, and as the price falls, the quantity demanded increases. This creates a downward-sloping demand curve.
What is the demand curve?
The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded. It typically slopes downward from left to right, reflecting the law of demand.
What is a shift in the demand curve?
A shift in the demand curve occurs when factors other than the price of the good (such as income, preferences, or the price of related goods) change, causing a change in the quantity demanded at every price level. A rightward shift indicates an increase in demand, and a leftward shift indicates a decrease.
What factors can cause a shift in the demand curve?
Factors that can cause a shift in the demand curve include:
1. Income: An increase in consumer income leads to an increase in demand for normal goods.
2. Consumer tastes and preferences: A change in consumer preferences can increase or decrease demand.
3. Price of related goods: The demand for a good can be influenced by the price of substitutes or complements.
4. Expectations: If consumers expect prices to rise in the future, current demand may increase.
5. Population changes: An increase in population or changes in demographics can shift demand.
What is the difference between a movement along the demand curve and a shift in the demand curve?
A movement along the demand curve occurs when the price of the good changes, causing a change in the quantity demanded (e.g., a price decrease leads to an increase in quantity demanded). A shift in the demand curve occurs when a non-price factor (such as income or preferences) changes, causing a change in demand at every price level.
