2.1 Demand

• What is demand in economics defined as?

  Quantity consumers willing to buy
• Market demand is the total demand by all consumers at each price point.
• As the price of a good increases, the quantity demanded decreases
• What happens to the demand for a good if its substitute becomes cheaper?

  Decreases
• How does an increase in the number of buyers affect market demand?

  Increases
• In the demand function, the letter I represents income.
• The Law of Demand states that there is a direct relationship between price and quantity demanded.

  False
• What does highly elastic demand mean for consumers?

  Large change in quantity demanded
• What is an example of a good with inelastic demand?

  Necessary medicine
• What are the two types of demand mentioned in economics?

  Individual and market
• Order the determinants of demand based on their influence:

  1️⃣ Price

  2️⃣ Income

  3️⃣ Tastes

  4️⃣ Prices of Related Goods

  5️⃣ Consumer Expectations

  6️⃣ Number of Buyers
• The Law of Demand assumes all other factors remain constant, a condition known as ceteris paribus.
• Discount sales lead to increased clothing purchases, illustrating the Law of Demand.
• Match the elasticity of demand with its characteristic:

  Highly Elastic Demand ↔️ High responsiveness to price changes

  Inelastic Demand ↔️ Low responsiveness to price changes
• What are the determinants of demand that influence consumer willingness to purchase goods?

  Price, income, tastes, etc.
• Lower prices of a good increase its demand.
• What does a demand curve illustrate graphically?

  Price and quantity demanded
• A demand curve is downward sloping due to the Law of Demand.
• Order the factors that can cause shifts in the demand curve:

  1️⃣ Changes in income

  2️⃣ Changes in tastes

  3️⃣ Changes in prices of related goods

  4️⃣ Shifts in consumer expectations

  5️⃣ Fluctuations in the number of buyers
• An increase in income shifts the demand curve to the right.
• What does demand measure in economics?

  Consumer willingness to purchase
• The individual demand curve shows demand for a single consumer
• What does the x-axis of a demand curve represent?

  Quantity demanded
• The y-axis of a demand curve represents price
• The demand curve is downward sloping due to the Law of Demand.
• What does a demand curve illustrate?

  Price and quantity demanded
• An increase in income always shifts the demand curve to the right.

  False
• Higher income for inferior goods shifts the demand curve to the left
• What happens to the demand curve when the price of a substitute good decreases?

  Shifts left
• Order the factors that can cause shifts in the demand curve:

  1️⃣ Changes in income

  2️⃣ Alterations in tastes

  3️⃣ Variations in related goods' prices

  4️⃣ Shifts in expectations

  5️⃣ Fluctuations in buyers
• Demand refers to the quantity consumers are willing and able to purchase at various prices during a specific period.
• What is the difference between individual and market demand?

  Single vs total demand
• The determinants of demand include price, income, tastes, and consumer expectations
• What does the Law of Demand state?

  Inverse price-demand relationship
• The Law of Demand assumes all other factors remain constant.
• What does demand refer to in economics?

  Quantity consumers purchase
• The total demand from all consumers is called market demand.
• The impact of price on demand is positive.

  False
• What does the Law of Demand state?

  Inverse price-demand relationship
• The assumption that all other factors remain constant in the Law of Demand is called ceteris paribus.