ECON 212 Lecture Notes - Demand Curve, Normal Good, Giffen Good

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Saw before that a decrease in the price of one good increases a consumer"s consumption possibilities by seeing a rotation outwards of the bl and opposite for increase in price. New change in price for good x means new quantity demanded. We can use these baskets to create an individual demand curve for the consumer. A decrease in price leads the consumer down and to the right along the demand curve. The demand curve is also a willingness to pay . When you have a lot of x, the consumer is willing to give up a lot of it to get y: this is the mrs and it is different at every point in the demand curve. So a consumer"s willingness to pay for an additional unit of y falls as they buy more and more of the good y.

Related Questions

If a sales tax on beer leads to reduced taxrevenue,this means:
Select correct option:
Elasticity of demand is < 1.
Elasticity of demand is > 1.
Demand is upward-sloping.
Demand is perfectly inelastic.

When the price of petrol rises 10%, the quantity of petrolpurchasedfalls by 8%. The demand for petrol is:
Select correct option:
Perfectly elastic
Unit elastic
Elastic
Inelastic

A Demand Curve is price inelastic when:
Select correct option:
Changes in demand are proportionately smaller than thoseinprice
Changes in demand are proportionately greater than thoseinprice
Changes in demand are equal than those in price
None of the given options.

The effect of a change in the price of a good or service onthequantities consumed when the consumer remains indifferentbetweenthe original and new combination of goods consumed isthe:
Select correct option:
Substitution effect
Real income effect
Income effect
Price effect

The numerical measurement of a consumerâspreference iscalled:
Select correct option:
Satisfaction
Use
Pleasure
Utility

The substitution effect of a price decrease for a good with anormalindifference curve pattern:
Select correct option:
Is always inversely related to the price change.
Measures the change in consumption of the good that is due totheconsumerâs feeling of being richer.
Is measured by the horizontal distance between the original andthenew indifference curves.
Is sufficient information to plot an ordinary demand curve forthecommodity being considered.

amaranthhyena636

The demand curve for a good is very unlikely to be perfectly vertical because

A) scarcity and limited income restrict the ability of consumers to afford goods as they become very expensive.
B) as the price of a good rises to high enough levels, the incentive for other suppliers to invent new substitutes for the good increases.
C) consumers generally do not care about the price of the goods they consume.
D) both a and b are true.

As the period for firms to expand output is lengthened, the elasticity of the market supply curve will

A) approach zero.
B) increase.
C) decrease.
D) remain the same since time does not affect the elasticity of market supply.

The price elasticity of demand for automobiles measures the responsiveness of

A) consumer purchases to a change in the price of automobiles.
B) consumer purchases to a change in the quality of automobiles.
C) supplier production levels to a change in the price of automobiles.
D) consumer purchases of automobiles to a change in their income.

Which of the following is true regarding the price elasticity of demand?

A) Demand is generally more elastic in the long run than in the short run.
B) Along a single demand curve, demand elasticity decreases as you move down the curve (to lower prices).
C) a flatter demand curve (has a less steep slope) is relatively more elastic than a demand curve that has a steeper slope.
D) All of the above are true.

5. (Answer ONE of the Following Question)

Economists maintain that the price of a product does not affect demand. How can this be true?
National defence is considered a public good because there appear to be no limits to the nonrivalry-in-consumption characteristic, and exclusion of nonpayers is impossible. Are there any other goods that so perfectly meet both public goods criteria?
Congressman Local stuff always votes for a balanced budget amendment to the U.S. Constitution. He also always votes for spending bills supported by the leadership of his political party. Is this rational?

carminecheetah752

1.Brian receives more utility from two apples than from one apple. However, the amount of extra utility provided decreases with each additional apple. This example illustrates which of the following:

a. Scarcity

b. Utility maximization

c. Inelastic demand

d. Diminishing marginal utility

2.A listeria outbreak recently hit the US cantaloupe industry, resulting in decreased consumer demand for cantaloupe. How is this demand decrease reflected on the demand curve?

a.Inward shift of the demand curve

b.Outward shift of the demand curve

c.Upward movement along the demand curve

d.No change in the demand curve

3.The price of beef increases, resulting in decreased consumer demand for beef. How is this demand decrease reflected on the demand curve?

a.Inward shift of the demand curve

b.Outward shift of the demand curve

c.Upward movement along the demand curve

d.No change in the demand curve

4.A 1% increase in the price of cereal leads to a 2% decrease in consumer demand for cereal. Which of the following best describes the own-price elasticity of cereal?

a.Inelastic

b.Unitary elastic

c.Elastic

5.The slope of the demand curve for salt is ________the demand curve for steak.

a.Steeper than

b.The same as

c.Flatter than

6.The price of butter decreases from $3/lb to $2/lb. The quantity demanded of butter increases from 2lbs to 3.5lbs. What is the own-price elasticity of butter?

a.-1.27

b.-2.25

c.-2.50

d.-1.49

7.The price of crackers increase from $2/box to $2.5/box. Demand for cheese decreases from 1.5/lbs to 1/lb. Which of the following best describes the relationship between crackers and cheese?

a.Complements

b.Unitary

c.Substitutes

d.Inelastic

8.A householdâs income decreases from $50,000/year to $40,000/year. The householdâs demand for steak decreases from 20/lbs to 15/lbs per year. What is the income elasticity of demand for steak?

a.1.25

b.0.76

c.0.25

d.1.00

9.Morton decides to increase the price of its salt from $1/lb to $1.5/lb. How will this price increase affect sales?

a.Sales of salt will increase

b.Sales of salt will remain the same

c.Sales of salt will decrease

10.Haagen Dazs decides to increase the price of its ice cream from $5/pint to $7/pint. How will this price increase affect sales?

a.Sales of Haagen Dazs ice cream will increase

b.Sales of Haagen Dazs ice cream will remain the same

c.Sales of Haagen Dazs ice cream will decrease

ECON 212 Lecture Notes - Demand Curve, Normal Good, Giffen Good

ECON 212 Full Course Notes

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