Intro to Demand

Introduction to the simple stuff in demand, economics.

Define Demand

When someone is willing and able to purchase a good or service.

What is the demand curve, what does it show?

Demand curve is a downward sloping curve that shows the inverse relationship between price and quantity demanded.

Define contraction and extension in demand

Contraction- Price increases, contraction in demand

Extension- Price decreases, extension in demand

Define Inelastic demand and total revenue

when price increases, demand decreases by a smaller amount, overall revenue increases

when price decreases, demand increases by a smaller amount, overall revenue decreases

Define Elastic demand and total revenue

When price increases, demand decreases by a larger amount, overall revenue decreases

When price decreases, demand increases by a larger amount, overall revenue decreases

Define Unitary elastic demand and total revenue

When price goes up or down, total revenue doesnt change.

How do you calculate total profits?

Total revenue - Total costs = total profits

How do you calculate total revenue?

Price x Quantity = Total revenue

What do neoclassical economists assume of producers and consumers?

They assume producers want to maximise profits and consumers want to maximise utility