2.1.1 Demand

• Price and quantity demanded have an inverse relationship, represented by a downward-sloping demand curve.
• What are the main factors affecting demand?

  Price, income, related goods
• The Law of Demand states that as price increases, quantity demanded decreases.
• Order the factors that shift the demand curve based on their primary effects:

  1️⃣ Consumer tastes and preferences

  2️⃣ Number of consumers

  3️⃣ Consumer expectations
• The Law of Demand explains the inverse relationship between price and quantity demanded.
• What type of relationship exists between substitutes and demand?

  Inverse relationship
• What does the Law of Demand state?

  Price increases, demand decreases
• Arrange the differences between movement along and shifts of the demand curve:

  1️⃣ Movement along: Change in quantity demanded due to price change

  2️⃣ Shift: Change in demand due to other factors

  3️⃣ Movement along: Depicted as moving along the curve

  4️⃣ Shift: The entire demand curve moves

  5️⃣ Example: Price of coffee increases, consumers buy less

  6️⃣ Example: Income rises, consumers buy more coffee
• The demand curve slopes upward from left to right.

  False
• Supply is defined as the quantity producers are willing and able to sell
• Changes in consumer expectations can shift the demand curve.


  True
• Substitutes have an inverse relationship with demand, while complements have a direct relationship.

  True
• What happens to total demand when the number of consumers increases?

  It increases
• Expectations of future price changes can affect current demand.


  True
• Match the factor with its effect on demand:

  Price ↔️ Inverse relationship

  Income ↔️ Direct relationship

  Consumer expectations ↔️ Affects current demand

  Number of consumers ↔️ Increases total demand
• The Law of Demand is typically represented by a downward-sloping demand curve
• What is the definition of a shift in the demand curve?

  Change in demand itself
• A demand schedule is a table showing the quantity demanded at various prices.

  True
• Elasticity of demand measures how much quantity demanded changes in response to changes in various factors
• What does cross-price elasticity measure?

  Responsiveness to related goods
• Inelastic demand means that a large change in price leads to only a small change in quantity demanded.


  True
• What is the definition of demand?

  Willing and able to purchase
• Demand complements supply in economic analysis.


  True
• What effect do changes in consumer tastes have on the demand curve?

  Shift the entire curve
• The Law of Demand is represented by a downward-sloping demand curve.


  True
• What is the effect of higher income on the demand for normal goods?

  Demand increases
• Consumer expectations about future price changes can affect current demand.


  True
• The Law of Demand is illustrated by a downward-sloping demand curve.
• Factors that shift the demand curve can change the quantity demanded at any given price
• A demand schedule is a table showing the quantity demanded at various prices
• What are the two critical components of demand?

  Willingness and ability
• What is the relationship between price and demand?

  Inverse
• A higher income leads to a higher quantity demanded
• Changes in consumer tastes and preferences can shift the demand curve
• What does a shift in the demand curve indicate?

  Change in quantity demanded
• What is the Law of Demand?

  Inverse price-quantity relationship
• A movement along the demand curve is caused by a change in the price of the good itself.

  True
• A shift of the demand curve is caused by a change in factors affecting demand
• What does the demand curve visually demonstrate?

  Inverse price-quantity relationship
• A 10% price increase for coffee leading to a 15% decrease in demand is an example of price elasticity.

  True