ECONOMICS Lecture Notes - Lecture 4: Invisible Hand, Aggregate Demand, Demand Curve

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orchidworm417

14 Jun 2021

School

Walsh College of Accountancy and Business Administration

Department

ECN

Course

ECONOMICS

Professor

Levina

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Document Summary

Demand analysis: demand is a flow concept: our willingness and ability to buy is not constant over time. Hence important to define a time period when talking about demand. Demand curve: it represents the relationship between price and quantity demanded, holding other factors constant, there exists an inverse relationship between price and quantity demanded the law of demand. Deriving a demand curve: an individual consumer"s demand schedule for good x is represented by the following schedule: Demand analysis price of x (kes per unit) consumer"s demand (units per week) Demand analysis price of x (kes per unit) Important characteristics of the demand curve: it has a negative slope: as the price increases, quantity demanded falls and vice versa. i. e. the law of demand, it is not always a straight line. E. g. a market or an aggregate demand curve will be convex to the origin.

Related Questions

Demand curve:

The demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at any given price. It is a graphic representation of a market demand schedule. The demand curve for all consumers together follows from the demand curve of every individual consumer: the individual demands at each price are added together, assuming independent decision-making. Demand curves are used to estimate behaviors in a competitive market and are often combined with supply curves to estimates the equilibrium price. Demand curves are usually considered as theoretical structures that are expected to exist in the real world, but real-world measurements of actual demand curves are difficult and rare.

The demand curve will move downward from the left to the right, which expresses the law of demand.

If the price of corn rises, consumers will have an incentive to buy less corn and substitute other foods, so the total quantity of corn consumers’ demand will fall. The degree to which rising price translates into falling demand is called demand elasticity or price elasticity of demand. If a factor besides price or quantity changes, a new demand curve needs to be drawn. For example, say that the population of an area explodes, increasing the number of mouths to feed. In this scenario, more corn will be demanded even if the price remains the same, meaning that the curve itself shifts to the right.

According to my view, the demand curve for the Apple Video iPod will increase. According to the given paragraph iPod is thinner and lighter. The hardware and software ecosystem offers good content options and also portable. These are the main qualities expected by the customers. Henceforth customer wants to buy this product in the future also. If the price of the product increases in the future the demand for the product also increases because customers demand more products thinking of price increase in the future. At the same time if the price decreases in this case also customers will buy the product because they think that the good product is coming at a reasonable price. The demand curve for Apple Video iPod in the future may be like follows.

What is your opinion on a competitor product which has similar features to that of an i-pad or say it is better than i-pad and is offered at a comparatively cheaper price, how this will affect the i-pad demand curve and why?

bronzemule740

Question 5.5. The elasticity of demand for clams is -0.45. Therefore an upward (inward) shift of the supply of clams, ceteris paribus, would result in: (Points : 10)

Lower clam prices
Increased clam consumption
Higher total revenues for clam producers
A drop in the demand for clams
A drop in consumer expenditures for clams

Question 6.6. The demand for which of these goods is most inelastic? (Points : 10)

Beef
A luxury cruise
Exxon gas
A Chevy truck
Salt

Question 7.7. The price of apples increases from $1.00 per pound to $1.50 per pound and the quantity of oranges demanded goes up from 8,000 pounds per week to 9,500 pounds per week. The cross-price elasticity for orange demand with respect to the price of apples is ___ and oranges and apples are ___ in consumption.
(Points : 10)

-0.51; complements
-0.43; complements
0; unrelated
0.43; substitutes
0.51; substitutes

Question 8.8. The income elasticity of peanut butter is 0.8. If consumersâ incomes were to increase by 5%, the percentage change in the quantity of peanut butter consumed would be ___ and peanut butter would be considered a ___ good. (Points : 10)

4; normal
4; inferior
6.25; normal
6.25; inferior
None of the above

Question 9.9. The most important single factor that influences the elasticity of supply for a commodity is: (Points : 10)

The elasticity of demand
Advertising
Degree of substitutability
Length of run
Whether it is a necessity

Question 10.10. Price discrimination is appropriate behavior of a firm facing a market in which: (Points : 10)

There is imperfect competition
The demand is quite inelastic
The demand is quite elastic
Different market segments have different demand elasticities
The good is considered to be a necessity

skymink376

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.

ECONOMICS Lecture Notes - Lecture 4: Invisible Hand, Aggregate Demand, Demand Curve

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