ECO-2023 Lecture Notes - Lecture 3: Invisible Hand, Economic Equilibrium, Shortage

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goldfly51

12 Jan 2016

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Law of demand: there is an inverse (negative) relationship between price of a good and the quantity that buyers are willing to purchase. The height of the demand curve at any quantity shows the maximum price that consumers are willing to pay any for an additional unit. Notice that when consumers have more of a certain good, they value it less. Consumer surplus: the difference between the maximum amount consumers would be willing to pay and the amount they actually pay. Area below the demand curve but above the price. Change in quantity demanded: a movement along the curve. Caused by a change in the price of that good. Increase in quantity demanded: movement down the curve (to the right) Decrease in quantity demanded: movement up the curve (to the left) Change in demand: a shift of the curve. Caused by a change in anything that affects demand other than the price of the good.

Related Questions

26. A graph called a demand curve can be used to illustrate the relationship between the price of compact disc players and the quantity of compact disc players demanded. If there is evidence that buyers' income and the price of cassette tape players also influence the demand for compact disc players, then a movement along the curve can be caused by a change in either the:
A) price of compact disc players or buyers' income.
B) price of cassette tape players or buyers' income.
C) quantity of compact disc players demanded or buyers income.
D) price of compact disc players or the quantity of compact disc players demanded.

27. A graph called a demand curve can be used to illustrate the relationship between the price of compact disc players and the quantity of compact disc players demanded. If there is evidence that buyers' income and the price of cassette tape players also influence the demand for compact disc players, then a shift in the curve can be caused by a change in either the:
A) price of compact disc players or buyers' income.
B) price of cassette tape players or buyers' income.
C) quantity of compact disc players demanded or buyers income.
D) price of compact disc players or the quantity of compact disc players demanded.

tealfrog419

A perfectly elastic demand implies that:

(i) any rise in price above that represented by the demand curve will result in a quantity demanded of zero.

(ii) buyers will not respond to any change in price.

(iii) quantity demanded and price change by the same percent as we move along the demand curve.

(iv) the price will rise by an infinite amount when there is a change in quantity demanded.

beigereindeer595

The market demand curve

a. slopes upward.

b. is found by vertically adding the individual demand curves.

c. represents the sum of the quantities demanded by all the buyers at each price of the good.

d. represents the sum of the prices that all the buyers are willing to pay for a given quantity of the good.

When we move along a given demand curve,

all nonprice determinants of demand are held constant.

only price is held constant.

all determinants of quantity demanded are held constant.

d. income and price are held constant.

When the price of a good or service changes,

	a.	there is a movement along a given demand curve.
	b.	the demand curve shifts in the opposite direction.
	c.	the supply curve shifts in the opposite direction.
	d.	the demand curve shifts in the same direction.

ECO-2023 Lecture Notes - Lecture 3: Invisible Hand, Economic Equilibrium, Shortage

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