Section1: What is Demand?

1.What is the definition of Demand?

The desire to have some good or service and the ability to pay for it.

2.In your own words, what is the law of demand?

Consumers want to buy more as the prices fall and less when the prices increase.

3.What is the difference between a demand schedule and a market demand schedule?
A demand schedule is a listing of how much of an item someone is willing to purchase at each price and a
Market demand schedule is a a listing of how much an item all consumers are willing to purchase at each
price.
4.A graph that shows how much of a good or service an individual will buy at each price is

called the __demand_______ curve.

5. Look at Figure 4.4 on page 102. Which direction does the curve slope from upper left to

lower right? (Letter C) They move downward as the curve goes from upper left to lower right.

Section 2: What Factors affect Demand?

6.Why does the demand curve slope in this direction?

The demand curve slopes in this direction because the law of diminishing marginal utility.

7.Explain the Income and substitution effect?

The income effects is the change of the amount of a product that a consumer will buy because the
Purchasing power of someones income, even though the income does not change. Substitution effect is
The pattern of behavior that occurs when consumers buy a substitute product in a reaction to the price
Rising.

8.What is the difference between Change in quantity demanded and Change in demand?
A change in quantity of a product is that consumers will buy because of a change in price.A change in
Demand is when such high employment has consumers buy different amounts of good or services at every
Price.

9.What are Normal goods? What are inferior goods?

Normal goods are goods that consumers demand more of when their incomes rise and inferior goods are
Goods that consumers demand less of when their incomes rise.

10. List the 6 factors that cause a change in Demand. These will shift the demand curve?
Income, Market Size, Consumer Tastes, Consumer Expectations, Substitutes, Complements.

11. Which way will the demand curve shift if there is an increase in demand? Decrease in

Demand? Shift to the right is an increase. A shift to the left is decrease

Section 3: What is Elasticity of Demand?

12. Economists use the term__elasticity________ of demand to describe the how responsive

consumers are to price changes in the marketplace.

13. Explain the difference between elastic and inelastic demand.

Elastic is when a change in price leads to a relatively larger change in the quantity demanded. Inelastic is
When a change in price leads to a relatively smaller change in quantity demanded. Big impact- elastic
Not big impact- inelastic

14. What 3 factors affect the elasticity of demand?

Substitute goods or services, proportion of income, and necessities versus luxuries.

15. Take a look at page 121, figure 4.16 Calculating Elasticity of Demand

Step 3 is important, the formula for calculating elasticity. What is the formula?

Price elasticity of demand = % of change in quantity demand / percentage change in price

Step 4-read this. I will explain. If the final number is greater than 1, demand is_price elastic______

If the final number is less than 1, demand is _price inelastic ___________.

16. If total revenue increases after the price of the product drops,, then demand for the

product is considered__elastic_____________.