Economics chapter 3
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Transcript of Economics chapter 3
![Page 1: Economics chapter 3](https://reader036.fdocuments.us/reader036/viewer/2022083000/55778226d8b42acf398b46ff/html5/thumbnails/1.jpg)
Economics Chapter 3Demand
3.1, 3.2, 3.3
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How does demand differ from the quantity demanded?•Demand is at various prices while
quantity demanded is at one particular price.
•Demand: the consumer is willing AND able to buy the product and the demand for the product must be examined over a certain time frame.
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What does the law of demand state?
•The relationship between the quantity demanded and the price is inverse. ▫Price is up, quantity demanded is down▫Price is down, quantity demanded is up.
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What do demand schedules and demand curves illustrate?•They show the relationship between price
and quantity demanded.•Demand schedule: shows various prices in
a certain amount of time to get the price at which the most profit is earned.
•Demand curves: plots the information on a graph.
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What does it mean for a products demand to shift?•It means there was a change in any
determinant of demand.•Makes the graph shift left or right.
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What factors can shift demand for a product?•Consumer tastes and preferences,•Market size,•Income,•Prices of related goods, and•consumer expectations.
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How do substitute goods differ from complementary goods?•Complementary goods are used with
other goods, ex. Chocolate syrup and milk.
•Substitute goods are substitutes for the real thing (usually at a cheaper price.) “the store brand”
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What is demand elasticity?
•The degree to which changes in a goods price affect the quantity demanded by consumers.▫Like a rubber band: you pull back harder,
the band swings back into place harder.
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What is the difference between elastic and inelastic demand?•Elastic demand: when the demands price
change leads to a significant change in quantity demanded.
•Inelastic demand: the opposite. The demands price has little effect on its change in quantity demanded.
•The difference is the effect of the price on the good.
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How is elasticity of demand measured?•The total revenue test: (total receipts)
monitoring any changes in a markets revenue before and after changes in price of a product.
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Credits
•Picture: "E101ch910." E101ch910. N.p., n.d. Web. 24 Aug. 2012. <http://www.oswego.edu/~atri/e101ch910.html>.•Information:Pennington, Robert Leroy. Holt Economics. Austin,Texas: Holt, Rinehart and Winston, 2003. Print.