Download 4.1 – Understanding Demand Name 1. Describe the law of demand

4.1 – Understanding Demand
Name
1. Describe the law of demand:
2. Define and give an example of the substitution effect:
3. Define and give an example of the income effect:
4. Use the market demand schedule below to draw a demand curve for miniature golf in the space on the
right:
Cost to Play a Game
$1.50
Games Played per
Month
350
$2.00
250
$3.00
140
$4.00
80
4.2 – Shifts of the Demand Curve
1. What assumption must hold true for a demand curve to remain accurate?
2. Describe the difference between movement along a demand curve and a shift of a demand curve:
3. Describe 4 factors that can cause demand for a good to change (a shift of the demand curve):
a.
b.
c.
d.
4. What is the difference between a normal good and an inferior good? Name an example of something you
would consider to be an inferior good:
5. Explain how demand for a good can affect demand for a complement good.
6. Explain how demand for a good can affect demand for a substitute good.
7. Use the following demand schedule to draw a demand curve. Then find and label a point on the graph that
could result from (a) an increase in the quantity demanded, (b) an increase in demand, and (c) a decrease in
demand.
Price
$1.00
$2.00
$3.00
$4.00
$5.00
Quantity
Demanded
250
200
150
100
50