ECN 1A Lecture 5: Lecture 5

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amberbear563

30 Jan 2019

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Total demand: total demand in an economy is the sum of all the individual demands by all customers in an economy. It is related to the people buying it. When the factor changes, the demand curve shifts, either to the left or right. Increase in price of one goods increases demand for another goods. Increase in the price of pepsi increases demand for coke. It is so, since people tend to choose the cheaper product (rational thinking) Increase in price of one goods decreases the demand for another goods. Increase the price of fuel decreases the demand for a car. It is so, since fuel consumption is needed for a car, and increasing the price of fuel will make the running cost of using a car increases. It is influenced by the advertising: the power of advertising can shift the demand curve to the right.

Related Questions

Which of the following is true?

a. The demand curve for a good shift leftward when the price of a substitute rises.
b. If consumers expect the price of a good will rise in the future, the demand curve shifts leftward.
c. An increase in population shifts the demand curve for most goods leftward.
d. For an inferior good, when income increases, the demand curve shifts leftward.

maroonferret252

1. When demand is inelastic, a decrease in price will cause

a. an increase in total revenue.

b. a decrease in total revenue.

c. no change in total revenue but an increase in quantity demanded.

d.no change in total revenue but a decrease in quantity demanded.

2. For which of the following types of goods would the income elasticity of demand be positive and relatively large?

a. all inferior goods

b. all normal goods

c. goods for which there are many complements

d. luxuries

3. Which of the following should be held constant when calculating the income elasticity of demand?

a. the quantity of the good demanded

b. the price of the good

c. income

d. All of the above should be held constant.

4. Suppose goods A and B are substitutes for each other. We would expect the cross-price elasticity between these two goods to be

a. positive.

b. negative.

c. either positive or negative. It depends on whether A and B are normal goods or inferior goods.

d. either positive or negative. It depends on whether the current price level is on the elastic or inelastic portion of the demand curve.

5. As the price elasticity of supply increases, the supply curve

a. becomes flatter

b. becomes steeper

c. becomes downward sloping.

d. shifts to the right.

brownsea-lion330

When quantity demanded decreases in response to a change in price,

A. the demand curve shifts to the right.
B. the demand curve shifts to the left.
C. there is a movement down along the demand curve.
D. there is a movement up along the demand curve.
E. the supply curve shifts to the right.

The price elasticity of demand is the measure of the responsiveness of the demand for a good to a percentage change in the price of that same good. When the demand for a good changes due to an increase or decrease in the price of the good, it can be said that the good has a price elastic demand. On the other hand, a good whose demand is not significantly affected by a change in the price levels is price inelastic. For example, luxury goods are usually price elastic because these are not something that most people really need. Thus, when the price of luxury goods increases, the demand for such goods falls. Goods that fall within the latter category are usually the basic necessities such as food and prescription medicine. Even when these types of goods become pricier, most people would find ways to afford them because they need those items to survive.

periwinkleraccoon781

ECN 1A Lecture 5: Lecture 5

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