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What is 'demand' in economics?
The willingness and ability of consumers to purchase a good or service at various prices.
What is 'quantity demanded'?
A specific amount of a good or service consumers are willing and able to purchase at a particular price.
What is the 'Law of Demand'?
The inverse relationship between price and quantity demanded: as price increases, quantity demanded decreases, and vice versa.
Define 'normal good'.
A good for which demand increases as consumer income increases.
Define 'inferior good'.
A good for which demand decreases as consumer income increases.
Define 'substitute goods'.
Goods that can be used in place of one another; if the price of one increases, the demand for the other increases.
Define 'complement goods'.
Goods that are used together; if the price of one increases, the demand for the other decreases.
What is meant by 'change in demand'?
A shift of the entire demand curve, caused by factors other than price.
What is meant by 'change in quantity demanded'?
A movement along the demand curve, caused only by a change in the price of the good.
Define 'equilibrium price'.
The price at which the quantity demanded equals the quantity supplied.
How does an increase in consumer income affect the demand for luxury cars?
Luxury cars are typically normal goods, so demand increases, shifting the demand curve to the right.
How does a decrease in the price of gasoline affect the demand for SUVs?
Gasoline and SUVs are complements. A decrease in gasoline price increases the demand for SUVs, shifting the demand curve to the right.
If the price of coffee increases significantly, what happens to the demand for tea?
Coffee and tea are substitutes. The demand for tea increases, shifting the demand curve to the right.
If consumers expect the price of a new gaming console to rise sharply next month, what happens to its current demand?
Current demand increases as consumers buy now to avoid higher future prices, shifting the demand curve to the right.
How does a widespread advertising campaign promoting the health benefits of a particular fruit affect its demand?
The demand for the fruit increases due to changed tastes/preferences, shifting the demand curve to the right.
If a new apartment complex opens in a city, how does this affect the demand for groceries?
The number of buyers increases, so the demand for groceries increases, shifting the demand curve to the right.
How does an increase in the price of peanut butter affect the demand for jelly?
Peanut butter and jelly are complements, so the demand for jelly decreases, shifting the demand curve to the left.
How does a recession (decrease in income) affect the demand for instant noodles?
Instant noodles are often an inferior good, so demand increases, shifting the demand curve to the right.
If a popular social media influencer stops promoting a certain brand of clothing, what happens to its demand?
Tastes/preferences decrease, so the demand for the clothing decreases, shifting the demand curve to the left.
How does the introduction of a cheaper, equally functional alternative affect the demand for a premium product?
Demand for the premium product decreases as consumers switch to the substitute, shifting the demand curve to the left.
Differentiate between a change in demand and a change in quantity demanded.
A change in demand is a shift of the entire curve due to factors other than price. A change in quantity demanded is a movement along the curve due to a change in price.
What is the key difference between normal and inferior goods in relation to changes in income?
Demand for normal goods increases with income; demand for inferior goods decreases with income.
Contrast the effect of a price increase of good A on the demand for its substitute versus its complement.
Price increase of good A increases demand for its substitute but decreases demand for its complement.
Compare the effects of an increase in the number of buyers versus a change in consumer tastes on the demand curve.
Both cause the demand curve to shift to the right (increase in demand), but for different reasons.
Compare and contrast the effect of a price increase on quantity demanded versus supply.
Price increase decreases quantity demanded (moves along demand curve), but increases quantity supplied (moves along supply curve).
Compare the effects of a change in price of a good and a change in income on the demand curve.
A change in price causes a movement along the demand curve. A change in income causes the entire demand curve to shift.
Differentiate between substitute goods and complement goods.
Substitute goods can be used in place of each other, while complement goods are used together.
Compare the effect of an expected future price increase versus a future price decrease on current demand.
Expected future price increase raises current demand. Expected future price decrease lowers current demand.
What is the difference between microeconomics and macroeconomics?
Microeconomics studies individual markets and decisions, while macroeconomics studies the economy as a whole.
Compare the effects of a change in consumer income on the demand for a normal good versus an inferior good.
An increase in consumer income will increase the demand for a normal good, while it will decrease the demand for an inferior good.