Demand

What is demand?

The relationship between price and quantity demanded, holding everythingelse constant.

What does the law of demand state?

As price increases, quantity demanded decreases, and vice versa.

Why does the demand curve slope downward?

Higher prices increase opportunity cost, and marginal benefit decreasesas more units are consumed.

What is the difference between demand and quantity demanded?

A change in demand shifts the entire curve; a change in quantity demanded is movement along the curve caused by a change in the good's own price.

What happens to demand when income increases for a normal good?

Demand increases

What happens to demand for an inferior good when income increases?

Demand decreases

What happens to demand for Coke if the price of Pepsi increases?

Demand for Coke increases because they are substitutes

What happens to demand for jelly if the price of peanut butter increases?

Demand for jelly decreases because they are complements.

What is the relationship between price and quantity demanded?

Inverse

What are major determinants of demand?

Income, tastes/preferences, prices of related goods, taxes/subsidies, expectations, and number of buyers.

If demand decreases, which direction does the demand curve shift?

Left

If demand increases, which direction does the demand curve shift?

Right