Understanding Demand Concepts

What does the Law of Demand state?

• As the price increases, the quantity demanded decreases.

• The quantity demanded remains constant regardless of price changes.

• Higher prices lead to higher demand for goods.

• As the price decreases, the quantity demanded increases.

Name two factors that can affect demand.

• Consumer preferences, income levels

• Advertising strategies

• Weather conditions

• Production costs

How does consumer income influence demand?

• Consumer income influences demand by increasing demand for normal goods and decreasing demand for inferior goods.

• Higher consumer income decreases demand for all products.

• Consumer income has no effect on demand for any goods.

• Consumer income only affects the supply of goods.

What is meant by a shift in demand?

• A shift in demand indicates a change in the supply of goods.

• A shift in demand refers to a decrease in consumer preferences.

• A shift in demand indicates a change in consumer willingness to buy at all price levels.

• A shift in demand means an increase in production costs.

Give an example of a good that might see an increase in demand due to a change in consumer preferences.

• Frozen pizza

• Plant-based meat alternatives

• Canned soup

• Traditional beef burgers

What is the difference between movement along the demand curve and a shift in the demand curve?

• Both movement along the demand curve and a shift are caused by price changes.

• Movement along the demand curve refers to a change in quantity supplied, while a shift refers to a change in quantity demanded.

• Movement along the demand curve is caused by non-price factors, while a shift is caused by price changes.

• Movement along the demand curve is caused by price changes, while a shift in the demand curve is caused by non-price factors.

Define contraction of demand in economic terms.

• Contraction of demand refers to a shift in demand curve to the right.

• Contraction of demand is a decrease in quantity demanded due to an increase in price.

• Contraction of demand occurs when consumer preferences change favorably for a product.

• Contraction of demand is an increase in quantity demanded due to a decrease in price.

What causes an extension of demand?

• An increase in price

• A reduction in consumer preferences

• A decrease in price or an increase in consumer income or preferences.

• A decrease in consumer income

How does the price of substitutes affect demand?

• Lower substitute prices have no effect on demand.

• Higher substitute prices decrease demand for the original good.

• The price of substitutes inversely affects demand; higher substitute prices increase demand for the original good, while lower substitute prices decrease it.

• The price of substitutes has a direct effect on demand, increasing it regardless of price changes.

Explain how advertising can lead to a shift in demand for a product.

• Advertising decreases consumer interest in products.

• Advertising can lead to a shift in demand for a product by increasing consumer awareness and interest, resulting in more purchases.

• Advertising only benefits the company, not the consumers.

• Advertising has no effect on consumer purchasing behavior.