Deriving the Demand Curve and Understanding the Law of Demand

The video tutorial explains the concept of demand, differentiating between demand and effective demand. It introduces utility and its influence on consumer behavior, leading to the derivation of the demand curve through the law of diminishing marginal utility. The law of demand is discussed, highlighting its inverse relationship between price and quantity demanded. Exceptions to the law, such as Veblen and speculative goods, are also covered. The tutorial concludes with a summary of the key points on demand curves.

What is the key difference between demand and effective demand?

• Effective demand includes the ability to pay, while demand does not.

• Demand includes the ability to pay, while effective demand does not.

• Effective demand is only relevant for luxury goods.

• Demand is always higher than effective demand.

What does the law of diminishing marginal utility suggest?

• Utility increases with each additional unit consumed.

• Utility remains constant with each additional unit consumed.

• Utility decreases with each additional unit consumed.

• Utility is unrelated to the number of units consumed.

According to the law of demand, what happens when the price of a good increases?

• The quantity demanded becomes unpredictable.

• The quantity demanded remains the same.

• The quantity demanded decreases.

• The quantity demanded increases.

What is a demand curve?

• A graphical representation of the relationship between supply and demand.

• A graphical representation of the relationship between utility and quantity demanded.

• A graphical representation of the relationship between price and quantity demanded.

• A graphical representation of the relationship between price and supply.

What is the assumption of ceteris paribus in the context of demand curves?

• All factors change except price.

• None of the factors remain constant.

• Only price changes while all other factors remain constant.

• All factors remain constant including price.

Which of the following is an example of a Veblen good?

• Basic food items

• Luxury watches

• Generic clothing

• Public transportation

How do speculative goods behave in relation to the law of demand?

• Their demand decreases as prices increase.

• Their demand remains constant as prices increase.

• Their demand increases as prices increase.

• Their demand is unaffected by price changes.