Test Your Knowledge: Demand Concepts for High School Business

📚 Quick Study Guide

• 📈 Demand: The quantity of a good or service that consumers are willing and able to purchase at a given price during a specific period.
• 🍎 Law of Demand: States that, all other things being equal, the quantity demanded of a good falls when the price of the good rises, and vice versa.
• 💸 Factors Affecting Demand:
  • 💰 Income: Affects the ability to purchase goods.
  • ✨ Tastes: Consumer preferences influence demand.
  • 👯 Related Goods Prices: Prices of substitutes and complements impact demand.
  • 🔮 Expectations: Future price expectations can shift demand.
  • 👥 Number of Buyers: More buyers increase demand.
• ↔️ Change in Quantity Demanded vs. Change in Demand:
  • ↔️ Change in Quantity Demanded: Movement *along* the demand curve due to a change in price.
  • ➡️ Change in Demand: Shift of the entire demand curve due to changes in factors *other than* price.
• Elasticity of Demand: Measures how much the quantity demanded responds to a change in price.
  • 📊 Elastic Demand: A large change in quantity demanded for a small change in price ($> 1$).
  • 🧱 Inelastic Demand: A small change in quantity demanded for a large change in price ($< 1$).
  • ⚖️ Unit Elastic Demand: Percentage change in quantity demanded equals the percentage change in price (= $1$).
• 🧪 Price Elasticity of Demand (PED) Formula: $PED = \frac{\% \; Change \; in \; Quantity \; Demanded}{\% \; Change \; in \; Price}$

Practice Quiz

1. Which of the following best describes the Law of Demand?
   1. The quantity supplied increases as price increases.
   2. The quantity demanded increases as price increases.
   3. The quantity demanded decreases as price increases.
   4. The quantity supplied decreases as price decreases.
2. An increase in consumer income will most likely cause which of the following?
   1. A decrease in the demand for inferior goods.
   2. A decrease in the demand for normal goods.
   3. An increase in the supply of all goods.
   4. No change in the demand for any goods.
3. What is the main difference between a change in quantity demanded and a change in demand?
   1. A change in quantity demanded shifts the demand curve.
   2. A change in demand is caused by a change in price.
   3. A change in quantity demanded is a movement along the demand curve.
   4. There is no difference.
4. If the price of a complement to good X decreases, what happens to the demand for good X?
   1. It decreases.
   2. It increases.
   3. It stays the same.
   4. It becomes perfectly elastic.
5. If the Price Elasticity of Demand for a product is 0.5, the demand is considered to be:
   1. Elastic.
   2. Unit elastic.
   3. Perfectly elastic.
   4. Inelastic.
6. Which of the following would NOT cause a shift in the demand curve for iPhones?
   1. A change in consumer income.
   2. A change in the price of Android phones.
   3. A change in the price of iPhones.
   4. A change in consumer tastes regarding smartphones.
7. If consumers expect the price of gasoline to increase next week, what will happen to the demand for gasoline today?
   1. It will decrease.
   2. It will increase.
   3. It will stay the same.
   4. It will become perfectly inelastic.