Notes 79-83
-Demand - desire to own something and the ability to buy it
-we look for demand to know what to produce
-Law of demand - consumers buy more of a good when its price decreases and less when its price increases
-law of demand results from:
-Substitution Effect - when consumers react to an increase in a goods price by consuming less of that good and more of other goods
-Income effect - the change in consumption resulting from a change in real income
-price of any item affects the quantity demanded of that item
-Demand schedule - a table that lists the quantity of a good a person will buy at each different price
-you want to know the demand schedule for customers as a whole
-Market demand schedule - a table that lists the quantity of a good all consumers in a market will buy at each different place
-Demand curve - a graphic representation of a demand schedule
-the demand curve helps people predict demand and work around that to find what prices should be set to in order to make the most profit
Pg 83 1-4
1. Income effect - the change in consumption resulting from a change in real income
-a person starts with 2 dollars a day and buys a piece of pizza for one dollar a day. then they start making 4 and they buy 2 pieces of pizza.
2. 3 characteristics of a demand curve:
-shows the price of all goods and the quantity that the subject will buy at the set prices
-slopes downward to the right
-shows the quantities demanded by all consumers
3. The law of demand can apply only in a free market economy because it rely's on consumers freedom to choose what they want to buy, which doesn't exist in other economies.
4.
Price of CDs
quantity demanded per day
$5.00
3
$6.00
3
$7.00
3
$8.00
2
$9.00
2
$10.00
2
Notes Pg 85-88
-Factors, other than those listed on the market demand schedule have an effect on the buying and selling of goods.
-Govt. regulations Play a role in the pricing of goods
-ceteris paribus - a latin phrase that means "all other things held constant"
-a demand curve is accurate only as long as there are no changes other than price that could affect the consumer's decision
-the movement along a demand curve at which less is being purchased is referred to as decrease in quantity demanded
-any shift on the entire curve is called a change in demand
-a shift can result from change in Income, consumer expectations, consumer tastes and advertising, and population
-normal goods - goods that consumers demand more of when their income increases
-inferior goods - goods that consumers demand less of when their income increases
-our expectations about the future determine how much/what we are going to buy
-as the changes in size of the populations, demand for most produces will also change
-When something is popular, the demand goes up
-When something is less popular the demand goes down
-related goods are goods that go along with one another
-complements - two goods that are bought and used together
-substitutes - goods used in place of other goods
Ch. 4.2 1-7
1. macaroni and cheese
2. milk and cookies
3. honey O's
4. If true, the ceteris paribus makes the demand curve inacurate.
5. It has gone up
6. A shift along the curve is the demand of products going up while a shift of a demand curve is prices rising and in turn demand going down.
7. a) (Demand) with the prices down people will want to buy it more rather than if the prices were higher.
b) (quantity demanded) then more poeple will know about it.
c) (quantity demand) because there is little quantity then the price and price will rise.
Notes Pg 90-96
-elasticity of demand - a measure of how consumers react to a change in price
-inelastic - describes demand that is not very sensitive to a change in price
-elastic - describes a demand that is very sensitive to a change in price
-to compute elasticity of demand take the percentage change in the demand of a good and divide this number by the percentage change in the price of a good
-elasticity of a good demand for a good varies at every price level
-unitary elastic - demand whose elasticity is exactly equal to 1
-if there are few substitutes for a good, then even when its price rises greatly the demand stays up
-lack of substitutes makes demand inelastic
-substitutes make demand elastic
-the second factor in determining a goods elasticity of demand is how much of your budget you are willing to spend on said good
-the third factor in determining a goods elasticity varies a great deal from person to person but it is nonetheless important
-when a price changes consumers often need time to change their shopping habits
-elasticity is important to the study of economics because elasticity helps us measure how consumers respond to price changes for different products
-total revenue - the total amount of money a firm receives by swelling goods or services
-law of demand tells us that an increase in price will decrease the quantity demanded
-elastic demand comes from these factors: availability, limited budget, perception of the item
-firms need to know whether the demand for their products is elastic or inelastic at a given price
Ch 4.3 1-4, 7
1. If the price of a good relates to the amount people will purchase, its elastic.
2. Video games are games that have elastic demand.
3. demand for home heating fuel is inelastic, because at any price, people need to heat their homes.
4. We can calculate total revenue by the amount of goods sold and the price of said goods.
7. Changes such as more fuel efficient cars being produced can affect demand.
Ch 4 Review 9-14, 16
9. The substitution effect is when goods can be replaced by other goods so the prices stay competitively low. An example of this is gatoraid and poweraid
10. Three causes of shifts in the demand curve are income(amount people make) population(amount of people) and personal taste(what products people like).
11. Economists use percentage change to calculate elasticity of demand because they can generalize about more than one product at a time.
12. Four factors that affect elasticity are availability of substitutes, relative importance, necessities versus luxuries, and change over time.
13. There will always be a demand for inferior goods because there will always be people with lower incomes who need something. Demand for an inferior good would increase if the overall income increases.
14. False, the income increase will shift the curve right.
16. I recently purchased the following:
1) lighter/camera: elastic because it is a luxury
2) wallet: elastic because It was for a friend
3) Sun glasses: elastic because they are a luxury
4) water bottle: inelastic because i needed the water
5) book: elastic because i don't need it
-Demand - desire to own something and the ability to buy it
-we look for demand to know what to produce
-Law of demand - consumers buy more of a good when its price decreases and less when its price increases
-law of demand results from:
-Substitution Effect - when consumers react to an increase in a goods price by consuming less of that good and more of other goods
-Income effect - the change in consumption resulting from a change in real income
-price of any item affects the quantity demanded of that item
-Demand schedule - a table that lists the quantity of a good a person will buy at each different price
-you want to know the demand schedule for customers as a whole
-Market demand schedule - a table that lists the quantity of a good all consumers in a market will buy at each different place
-Demand curve - a graphic representation of a demand schedule
-the demand curve helps people predict demand and work around that to find what prices should be set to in order to make the most profit
Pg 83 1-4
1. Income effect - the change in consumption resulting from a change in real income
-a person starts with 2 dollars a day and buys a piece of pizza for one dollar a day. then they start making 4 and they buy 2 pieces of pizza.
2. 3 characteristics of a demand curve:
-shows the price of all goods and the quantity that the subject will buy at the set prices
-slopes downward to the right
-shows the quantities demanded by all consumers
3. The law of demand can apply only in a free market economy because it rely's on consumers freedom to choose what they want to buy, which doesn't exist in other economies.
4.
Notes Pg 85-88
-Factors, other than those listed on the market demand schedule have an effect on the buying and selling of goods.
-Govt. regulations Play a role in the pricing of goods
-ceteris paribus - a latin phrase that means "all other things held constant"
-a demand curve is accurate only as long as there are no changes other than price that could affect the consumer's decision
-the movement along a demand curve at which less is being purchased is referred to as decrease in quantity demanded
-any shift on the entire curve is called a change in demand
-a shift can result from change in Income, consumer expectations, consumer tastes and advertising, and population
-normal goods - goods that consumers demand more of when their income increases
-inferior goods - goods that consumers demand less of when their income increases
-our expectations about the future determine how much/what we are going to buy
-as the changes in size of the populations, demand for most produces will also change
-When something is popular, the demand goes up
-When something is less popular the demand goes down
-related goods are goods that go along with one another
-complements - two goods that are bought and used together
-substitutes - goods used in place of other goods
Ch. 4.2 1-7
1. macaroni and cheese
2. milk and cookies
3. honey O's
4. If true, the ceteris paribus makes the demand curve inacurate.
5. It has gone up
6. A shift along the curve is the demand of products going up while a shift of a demand curve is prices rising and in turn demand going down.
7. a) (Demand) with the prices down people will want to buy it more rather than if the prices were higher.
b) (quantity demanded) then more poeple will know about it.
c) (quantity demand) because there is little quantity then the price and price will rise.
Notes Pg 90-96
-elasticity of demand - a measure of how consumers react to a change in price
-inelastic - describes demand that is not very sensitive to a change in price
-elastic - describes a demand that is very sensitive to a change in price
-to compute elasticity of demand take the percentage change in the demand of a good and divide this number by the percentage change in the price of a good
-elasticity of a good demand for a good varies at every price level
-unitary elastic - demand whose elasticity is exactly equal to 1
-if there are few substitutes for a good, then even when its price rises greatly the demand stays up
-lack of substitutes makes demand inelastic
-substitutes make demand elastic
-the second factor in determining a goods elasticity of demand is how much of your budget you are willing to spend on said good
-the third factor in determining a goods elasticity varies a great deal from person to person but it is nonetheless important
-when a price changes consumers often need time to change their shopping habits
-elasticity is important to the study of economics because elasticity helps us measure how consumers respond to price changes for different products
-total revenue - the total amount of money a firm receives by swelling goods or services
-law of demand tells us that an increase in price will decrease the quantity demanded
-elastic demand comes from these factors: availability, limited budget, perception of the item
-firms need to know whether the demand for their products is elastic or inelastic at a given price
Ch 4.3 1-4, 7
1. If the price of a good relates to the amount people will purchase, its elastic.
2. Video games are games that have elastic demand.
3. demand for home heating fuel is inelastic, because at any price, people need to heat their homes.
4. We can calculate total revenue by the amount of goods sold and the price of said goods.
7. Changes such as more fuel efficient cars being produced can affect demand.
Ch 4 Review 9-14, 16
9. The substitution effect is when goods can be replaced by other goods so the prices stay competitively low. An example of this is gatoraid and poweraid
10. Three causes of shifts in the demand curve are income(amount people make) population(amount of people) and personal taste(what products people like).
11. Economists use percentage change to calculate elasticity of demand because they can generalize about more than one product at a time.
12. Four factors that affect elasticity are availability of substitutes, relative importance, necessities versus luxuries, and change over time.
13. There will always be a demand for inferior goods because there will always be people with lower incomes who need something. Demand for an inferior good would increase if the overall income increases.
14. False, the income increase will shift the curve right.
16. I recently purchased the following:
1) lighter/camera: elastic because it is a luxury
2) wallet: elastic because It was for a friend
3) Sun glasses: elastic because they are a luxury
4) water bottle: inelastic because i needed the water
5) book: elastic because i don't need it