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If the price of a product rises consumers buy less of the good because the?
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If price rises what happens to supply for a product?
it rises
When the price of a product rises consumers shift their purchases to other products whose prices are now relatively lower This statement describes?
The substitution effect
Why price and quantity demanded are inversely related?
Price is inversely related to quantity demanded because as price rises, consumers substitute other goods whose price has not risen.
According to the law of demand consumers will stop buying a fixed quantity of a product when?
The law of demand? I'm not quite sure if it's called that. Consumers will stop buying a product as and when they see that the price is set too high. It changes consumer to consumer - if the price of bread rises from £0.50 to £1, extremely poor people might stop buying it because they can't afford it, because the price is too high. Similarly, some consumers will never stop buying things because they are rich enough to afford the goods. Take a look at price elasticity of demand if you want to know more about when consumers stop buying products because of its price - the change of demand according to a change in price.
When the price of a product rises and the total revenue of sellers increase?
You have an inelastic product.
If price rises what happens to supply for a product?
it rises
When the price of a product rises consumers shift their purchases to other products whose prices are now relatively lower This statement describes?
The substitution effect
Why price and quantity demanded are inversely related?
Price is inversely related to quantity demanded because as price rises, consumers substitute other goods whose price has not risen.
According to the law of demand consumers will stop buying a fixed quantity of a product when?
The law of demand? I'm not quite sure if it's called that. Consumers will stop buying a product as and when they see that the price is set too high. It changes consumer to consumer - if the price of bread rises from £0.50 to £1, extremely poor people might stop buying it because they can't afford it, because the price is too high. Similarly, some consumers will never stop buying things because they are rich enough to afford the goods. Take a look at price elasticity of demand if you want to know more about when consumers stop buying products because of its price - the change of demand according to a change in price.
When the price of a product rises and the total revenue of sellers increase?
You have an inelastic product.
When the price of a product rises faster than inflation rate?
the real income of the users of that product fall.
What is a demand for a product?
A demand for a product is when a customer expresses a desire or willingness to purchase a product. It is the amount of a product that customers are willing to buy at a specific price. Generally the demand for a product is determined by the price of the product the customers income the availability of a substitute and the customers preferences. When the price rises demand falls and when the price decreases demand increases.Factors that affect the demand for a product include: Price of the product Customers income Availability of a substitute Customers preferencesIf the price of the product rises then the demand for the product falls and vice versa. This is due to the fact that customers are willing to pay a certain price for a product and when the price increases customers will be less likely to purchase the product.
What are significance of cross price elasticity?
Cross price elasticity measures the connection between the price of one product and the demand for another product, so it is used to determine whether products are complements, substitutes, or unrelated. For example, if the price of aluminum foil rises and, as a result, the demand for plastic wrap rises, then the cross price elasticity will be a positive and significant number and will support the assertion that these two products are close substitutes. Companies have even used this to defend against allegations of monopoly power, using the cross price elasticity number to demonstrate that they do not have a monopoly since consumers can easily switch to a good substitute.
Is luxuries a normal good?
yes it is a normal good . because price rises, demand also rises subject to condition that income rises
What happens to the deadweight loss and tax revenue when a tax is increased?
The deadweight loss of a tax rises more than proportionally as the tax rises. Tax revenue, however, may increase initially as a tax rises, but as the tax rises further, revenue eventually declines. For example; if you sell a product with a $1.00 tax, you have less tax revenue than if you sold twenty of the product with a .10 cent tax. When you increase a tax, the revenue goes down because the product will not sell at that higher price.
How do substitutes affect demand?
When the price of a product rises, the individual will look at alternatives ( substitutes ) that are cheaper but give him same satisfaction.
How and why does a change in price affect the demand for substitutes?
if the price of a good rises, the demand for its substitute good also rises as well as if the price of a good falls, the demand for its substitute good also falls because substitute goods are those alternative goods which are availabe in the the market if a particular commodity fails to satisfy the consumers. Human being's wants are unlimited and there are only a limited resources to satisfy these wants. Money is supposed to be one of the scarcest resources available. So naturally man tries to make the best us of this resource. That is, he tries to satisfy maximum wants from the money available with him. A person can satisfy one need by utilizing a number of alternative resources. But being a rational individual, he will only use that alternative that is the most cost effective. That is where he has to spend minimum of the scarce resource called money. When the price of a product rises, the individual will look at alternatives ( substitutes ) that are cheaper but give him same satisfaction. The moment he finds an alternative, he shifts to the other product abandoning the use of the product whose price has been increased. Hence the price rise decreases the demand for the commodity whose price has been increased and increases the demand for the substitute product.
