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If the prices have a little effect on the quantity of a product demanded the product is said to have?
inelastic demand
What is theory of demand in economics?
The theory of demand states that the relation between price and quantity demanded is inversely proportional i.e. if prices go up, quantity demanded falls if prices go down, quantity demanded increases
How a market reacts to a all in supply by moving to a new equilibrium?
When there is an increase in supply in a market, the initial effect is typically a surplus, as the quantity supplied exceeds the quantity demanded at the original price. This surplus puts downward pressure on prices, prompting sellers to reduce their prices to attract more buyers. As prices decrease, the quantity demanded increases while the quantity supplied may also adjust as producers respond to lower prices. Eventually, the market reaches a new equilibrium where the quantity supplied equals the quantity demanded at the new, lower price.
How would an increase in income affect the equilibrium prices and quantity demanded of bus rides?
An increase in income typically leads to an increase in the demand for normal goods, including bus rides, as people can afford to use public transportation more often or may choose it over other, more expensive options. This rise in demand would shift the demand curve to the right, resulting in higher equilibrium prices and an increased quantity of bus rides demanded. However, if bus rides are considered inferior goods, the effect could be the opposite, leading to a decrease in demand, lower prices, and a reduced quantity demanded.
How does the income effect explain the change in quantity demanded that takes place when the price goes down?
the income effect is the increase in real income you get from a drop in prices, the real income increases because you can buy more goods with the same amount of income. This is different from the substitution effect which shows this effect by you buying more of the good because it is relatively cheaper than another good, so you are substituting the expensive good in favor of the cheaper one.
If the prices have a little effect on the quantity of a product demanded the product is said to have?
inelastic demand
What is theory of demand in economics?
The theory of demand states that the relation between price and quantity demanded is inversely proportional i.e. if prices go up, quantity demanded falls if prices go down, quantity demanded increases
How a market reacts to a all in supply by moving to a new equilibrium?
When there is an increase in supply in a market, the initial effect is typically a surplus, as the quantity supplied exceeds the quantity demanded at the original price. This surplus puts downward pressure on prices, prompting sellers to reduce their prices to attract more buyers. As prices decrease, the quantity demanded increases while the quantity supplied may also adjust as producers respond to lower prices. Eventually, the market reaches a new equilibrium where the quantity supplied equals the quantity demanded at the new, lower price.
How would an increase in income affect the equilibrium prices and quantity demanded of bus rides?
An increase in income typically leads to an increase in the demand for normal goods, including bus rides, as people can afford to use public transportation more often or may choose it over other, more expensive options. This rise in demand would shift the demand curve to the right, resulting in higher equilibrium prices and an increased quantity of bus rides demanded. However, if bus rides are considered inferior goods, the effect could be the opposite, leading to a decrease in demand, lower prices, and a reduced quantity demanded.
How does the income effect explain the change in quantity demanded that takes place when the price goes down?
the income effect is the increase in real income you get from a drop in prices, the real income increases because you can buy more goods with the same amount of income. This is different from the substitution effect which shows this effect by you buying more of the good because it is relatively cheaper than another good, so you are substituting the expensive good in favor of the cheaper one.
How does the income effect explain the change in quantity demanded that takes place when price goes down?
the income effect is the increase in real income you get from a drop in prices, the real income increases because you can buy more goods with the same amount of income. This is different from the substitution effect which shows this effect by you buying more of the good because it is relatively cheaper than another good, so you are substituting the expensive good in favor of the cheaper one.
When equilibrium demanded is greater than quantity the market prices will what?
rise
Why do people buy more of something at lower prices and less at higher prices?
the law of demand. an inverse relationship between the quantity demanded and the price of the product (the lower the price the higher the quantity demanded).
What does in demand mean?
the quantity demanded at each price in a set of prices is greater
What does increase in demand mean?
the quantity demanded at each price in a set of prices is greater
What is the relationship between price and quantity demanded as depicted by the MSC curve?
The relationship between price and quantity demanded as depicted by the MSC curve is that as the price of a good or service increases, the quantity demanded decreases. This is because higher prices typically lead to lower demand from consumers.
What happends when quantity supplied is less than quantity demanded?
Generally, prices will fall and only rise again when demand increases.
