ECON 101 Study Guide - Quiz Guide: Demand Curve
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ECON 101 Full Course Notes
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The law of demand states that a fall in price of a good raises the quantity demanded. Elastic: if the quantity demanded responds substantially to changes in the price. Inelastic: if the quantity demanded responds only slightly to the changes in price. The price of elasticity of demand: measures how willing consumers are to move away from the good as its price rises. Substitutes: goods with close substitutes tend to have more elastic demand because it is easier for consumers to switch from that good to others. Necessities versus luxuries: necessities tend to have inelastic demands, where luxuries have elastic demands. Definition of the market: narrowly defined markets tend to have more elastic demand than broadly defined markets because it is easier to find close substitutes for narrowly defined goods. Time horizon: goods tend to have more elastic demand over longer time horizons.
