Demand

what happens to demand as price increases

less people will want to buy the specific good

as demand falls, how does the curve change?

it moves to the left

what is price elasticity of demand

how responsive people are to changes in price

what is elastic demand

a large change in demand relative to price change

what is inelastic demand

a small change in demand relative to price change

is elasticity negative or positive

always negative since changes in price and quantity go in opposite directions

what makes demand more inelastic

• necessary goods

• addictive goods

• if there are no other substitutes available

what is consumer surplus

the difference between the maximum price a consumer is willing to pay for a good and the price they actually have to pay

what does the top of the demand curve show

people who really need to use the product and will pay a lot of money for it

what does the bottom of the demand curve show

people who aren’t willing to pay as much

what is the consumer surplus on the demand curve

the area under the demand curve, and above the price everyone pays