Download 6.7 Law of Demand

Econ Unit II – How Markets Work: Supply, Demand, Prices and Markets
NCSCOS – 8.01, 8.04, 8.05, 9.03
PART 1 – DEMAND
1. What is demand? ___________________________________________________
__________________________________________________________________
2. What is necessary for an individual to have affective demand?
a. ___________________________________________________
b. ___________________________________________________
c. ___________________________________________________
3. What is market demand? __________________________________________________________________
4. What does a demand schedule show?
__________________________________________________________________
5. Complete the following demand schedule for video games(based on page 571):
Price Per Video Game
$50
Quantity Demanded
$40
$30
$20
$10
$ 5
6. What is a demand curve? ____________________________________________
7. Plot the demand curve for the schedule above:
Demand curve for video game
8. What direction does the demand curve slope from left to right? _______________
9. What does the law of demand state?
__________________________________________________________________
10. What does utility refer to? __________________________________________________________________
11. What does the law of diminishing marginal utility state? ___________________
__________________________________________________________________
12. What factors affect demand in the market? (What are the determinants of demand?) changes in:
a. ___________________________________________________________
b. ___________________________________________________________
c. ___________________________________________________________
d. ___________________________________________________________
e. ___________________________________________________________
f. ___________________________________________________________
13. Suppose the price of video games suddenly increase dramatically, what would happen to the demand for video
games? ____________________________
14. Plot the new demand schedule showing a decrease of 100 at every price:
Price Per Video Game
Original Quantity Demand
New Quantity Demand
$50
$40
$30
$20
$10
$ 5
15. Graph the original curve and label it D1 then plot the change and label it D2:
16. With a decrease in demand at every price we will see a _____________ shift in the demand curve.
17. Now suppose that a new report comes out that states playing video games improve student’s grades in school.
What will happen to demand at every price?
_________________________________________________________
18. On the graph above plot the new change in demand showing an increase of 100 in market demand at every
price. Label the new curve D3.
19. What direction did the curve shift with an increase in demand at every price?
_________________________________________________________
20. What does demand elasticity refer to? ___________________________________
__________________________________________________________________
21. If a product has rather elastic demand it means the demand will change _______________ with a change in
price.
22. If a product has rather inelastic demand it means that demand will change _______________ with a change in
price.
23. Label the graph that illustrates a product with more elastic demand and the one with more inelastic demand:
24. What factors affect the elasticity of a good or service?
a. _________________________________________________
b. _________________________________________________
c. _________________________________________________
d. _________________________________________________