Economics Demand Curve: Shifts, Effects, and Key Concepts

What happens to the demand curve when there is an increase in demand?

The demand curve shifts to the right.

What is a decrease in demand represented by on the demand curve?

A shift to the left of the demand curve.

What is a normal good?

A good for which demand falls when income decreases.

What is an inferior good?

A good for which demand rises when income decreases.

How does a decrease in the price of frozen yogurt affect the demand for ice cream?

It reduces the demand for ice cream because they are substitutes.

What are complements in economics?

Goods that are used together, where a decrease in the price of one increases the demand for the other.

Give an example of complementary goods.

Ice cream and hot fudge.

How do individual tastes affect demand?

Tastes influence the quantity demanded but are unique to individuals and not typically analyzed by economists.

What impact do expectations about future income have on current demand?

Higher expected future income may lead to increased current spending.

What effect does an increase in the number of buyers have on market demand?

It increases the quantity demanded at every price.

What is the difference between a shift in the demand curve and a movement along the demand curve?

A shift occurs due to changes in variables not measured on either axis, while a movement occurs due to a change in price.

What are two ways policymakers can reduce smoking?

Shifting the demand curve for cigarettes and raising the price through taxes.

What happens to the demand curve for cigarettes when public health measures are successful?

The demand curve shifts to the left.

How does a tax on cigarettes affect the quantity demanded?

It raises prices, leading to a movement along the demand curve to a lower quantity demanded.

What is the price elasticity of demand for cigarettes among teenagers?

A ten percent price increase causes a twelve percent drop in teenage smoking.

What relationship do studies suggest between cigarette prices and marijuana use?

Lower cigarette prices are associated with greater use of marijuana, indicating they may be complements.

What is the law of demand?

As the price of a good increases, the quantity demanded decreases, and vice versa.

What is the role of the American Medical Association's discovery regarding ice cream?

It serves as an example of how a change in perception can increase demand.

What is the significance of the demand curve in economics?

It illustrates how quantity demanded changes as price varies, holding other factors constant.