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Describe the shape of a typical demand curve.
The demand curve typically slopes downward from left to right, illustrating the inverse relationship between price and quantity demanded.
What does a movement *along* the demand curve represent?
A change in quantity demanded due to a change in the price of the good itself.
What does a shift of the entire demand curve represent?
A change in demand due to factors other than the price of the good itself (e.g., income, tastes, etc.).
What does a rightward shift of the demand curve indicate?
An increase in demand, meaning that at every price level, consumers are willing and able to buy a larger quantity.
What does a leftward shift of the demand curve indicate?
A decrease in demand, meaning that at every price level, consumers are willing and able to buy a smaller quantity.
On a demand curve graph, which axis represents price?
The y-axis represents price.
On a demand curve graph, which axis represents quantity?
The x-axis represents quantity.
How would you graphically represent the effect of increased consumer income (assuming a normal good) on the demand curve?
The demand curve would shift to the right.
How would you graphically represent the effect of an increase in the price of a complementary good on the demand curve?
The demand curve for the original good would shift to the left.
How would you graphically represent the effect of a successful advertising campaign on the demand curve?
The demand curve would shift to the right.
What is 'demand'?
The relationship between the quantity of a good consumers are willing and able to buy and the price of that good.
What is a 'market'?
Where producers (firms) and consumers (buyers) meet to exchange goods or services.
Define 'quantity demanded'.
A specific point on the demand curve, indicating how much consumers want to buy at a particular price.
What is the 'Law of Demand'?
As the price of a good increases, the quantity demanded decreases, and vice-versa.
What is the 'Substitution Effect'?
When a good becomes more expensive, consumers switch to cheaper alternatives.
Define the 'Income Effect'.
When prices rise, purchasing power decreases, leading to a decrease in the quantity demanded.
What is 'Diminishing Marginal Utility'?
The more you consume of a good, the less satisfaction you get from each additional unit.
What is a 'normal good'?
A good for which demand increases as consumer income increases.
What is an 'inferior good'?
A good for which demand decreases as consumer income increases.
What are 'substitutes'?
Goods that can be used in place of each other. If the price of one increases, demand for the other increases.
What are 'complements'?
Goods that are consumed together. If the price of one increases, demand for the other decreases.
How does the Law of Demand apply to gasoline prices?
As gasoline prices increase, people tend to drive less, use public transport more, or buy more fuel-efficient cars, thus decreasing the quantity demanded.
How does the substitution effect impact the demand for Coke if Pepsi is on sale?
Consumers may switch to the relatively cheaper Pepsi, decreasing the quantity demanded for Coke.
How does the income effect influence luxury goods during a recession?
As incomes fall during a recession, the demand for luxury goods decreases because consumers have less purchasing power.
How does diminishing marginal utility affect 'all you can eat' buffets?
The satisfaction from each additional plate of food decreases, eventually leading consumers to stop eating even if they could eat more.
How do expectations of a future iPhone affect current demand?
If consumers expect a new iPhone to be released soon, current demand for the older model may decrease as people wait for the new release.
How does an increase in the price of hot dogs affect the demand for hot dog buns?
Since hot dogs and buns are complements, an increase in the price of hot dogs will likely decrease the demand for hot dog buns.
How does a change in consumer taste (e.g., a new health trend) affect the demand for sugary drinks?
If a new health trend discourages sugary drinks, the demand for these drinks will likely decrease.
How does an increase in the number of consumers affect the demand for housing?
An increase in the number of consumers (e.g., population growth) will likely increase the demand for housing, shifting the demand curve to the right.
How does a decrease in income affect the demand for instant noodles (assuming it's an inferior good)?
A decrease in income may lead to an increase in the demand for instant noodles as people switch to cheaper food options.
How does a technological advancement that lowers the cost of producing electric cars affect the demand for gasoline cars?
The demand for gasoline cars will likely decrease as cheaper electric cars become a more attractive substitute.