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The Law of Demand states that price and quantity demanded are inversely related. This means that for a normal good, the demand curve slopes downward. A demand curve might slope upward in the event that instead of being a normal good, we could be witnessing a so-called Giffen good. The existence of Giffen goods is debatable, but in theory they can be shown to be possible.
The rationale for the upward sloping demand curve is due to the real income effect on a basket of goods when one (or some) of the goods exhibits a price reduction. Under normal conditions, the reduction in price would allow you to purchase more of that good. However, if this is a Giffen good, the consumer will consume less of it in order to purchase more of another good.
This is not to be confused with an inferior good, for which a reduction in price leading to an increase in purchasing power results in substituting an inferior good (hamburger) in favour of a normal good (steak). This causes a shift in the demand curve. For Giffen goods, no close substitute would cause the consumer to spend less on the cheaper good in order to purchase more of a non-substitute good, say, pencils wherein the cost of rice is reduced.
What else can I help you with?
Why does the supply curve slope down?
Actually, supply curve slops upward 9a positive slope). This is due to the fact that as price rises, suppliers would see more benefit in producing these goods (as being able to make more profit).
If automobile workers went on strike causing a decreased supply of cars the supply curve would shift inward to the left and .?
there would be an eventual upward movement along the demand curve, reestablishing equilibrium
If automobile workers went on strike causing a decreased supply of cars the supply curve would shift inward to the left and?
there would be an eventual upward movement along the demand curve, reestablishing equilibrium
How would the demand curve of cigarettes?
Demand curve will be perfect inelastic
What would cause a movement upward and to the left along the demand curve for olives?
A movement upward and to the left along the demand curve for olives typically indicates a decrease in the quantity demanded due to an increase in price. This could occur if the price of olives rises due to factors such as a decrease in supply or increased production costs. Additionally, if consumers find substitutes for olives, their demand may drop, leading to this movement along the curve.
Why does the supply curve slope down?
Actually, supply curve slops upward 9a positive slope). This is due to the fact that as price rises, suppliers would see more benefit in producing these goods (as being able to make more profit).
If automobile workers went on strike causing a decreased supply of cars the supply curve would shift inward to the left and .?
there would be an eventual upward movement along the demand curve, reestablishing equilibrium
If automobile workers went on strike causing a decreased supply of cars the supply curve would shift inward to the left and?
there would be an eventual upward movement along the demand curve, reestablishing equilibrium
How would the demand curve of cigarettes?
Demand curve will be perfect inelastic
What would cause a movement upward and to the left along the demand curve for olives?
A movement upward and to the left along the demand curve for olives typically indicates a decrease in the quantity demanded due to an increase in price. This could occur if the price of olives rises due to factors such as a decrease in supply or increased production costs. Additionally, if consumers find substitutes for olives, their demand may drop, leading to this movement along the curve.
How would a keynesian view the money demand curve and the investment demand curve?
by looking at it
Is an increase in demand represented by a movement up the demand curve?
An increase in demand is represented by a shift of the demand curve to the right; not a movement along the demand curve. An increase in the quantity demanded would be a movement down the demand curve.
What is the distinctive feature of the demand curve of a firm in pure competition?
The demand curve would be perfectly elastic.
How would a rise in business affect the aggregate demand curve?
The aggregate demand curve shifts to the right
Is demand needed in equilibrium?
Yes. Equilibrium is created at the intersection of the Demand curve and Supply Curve. Equilibrium can be shifted if the Demand curve increases or decreases, and the same happens when the Supply curve increases or decreases. Without demand, you would just have a Supply curve.
How would a rise in the business investment affect the aggregate demand curve?
The aggregate demand curve shifts to the right
Why does demand curve slope downward from left to right?
We have seen already that demand curves (price Demand) slope downwards from left to right. Since demand curve is only a geometrical representation of the law of demand with 'quantity' on the X axis, and 'price' on the Y axis, the shape of the demand curve has to be necessarily of one sloping downwards showing that more is demanded at a lower price. The question why does the demand curve slope downwards is an indirect way of asking why does the law of demand operate. What are the reasons behind the operation of law of demand? why do people demand more if price comes down? So it is better to discuss the reasons behind the law of demand or the economics of law of demand in order to understand the question under discussion.
