State the law of demand and illustrate it. Explain what is meant by the term "price" in the law of demand
What will be an ideal response?
The law of demand states that when the price of a good increases, people buy less of the good, other things equal, and when price of a good decreases, people buy more of it. An increase in the price of gasoline would lead people to buy less gasoline. Price means "relative price," or the price of the good in terms of other goods. People make their decisions on the basis of relative prices and not on the basis of the money price.
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Answer the next question using the following budget information for a hypothetical economy. All data are in billions of dollars. Government SpendingTax RevenuesGDPYear 1$800$825$4,000Year 28508504,200Year 39008754,350Year 49509004,500Year 51,0009254,600The budget deficit was $75 billion in
A. Year 2. B. Year 3. C. Year 4. D. Year 5.
Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. Which of the following best represents Kate's inverse residual demand function?
A. P(QK) = (100 - 0.005QA) - 0.005QK B. P(QK) = (100 - 0.005QK) - 0.005QA C. P(QK) = (200 - 0.005QA) - 0.005QK D. P(QK) = (200 - 0.005QA) - 0.005QA
Most transactions in the foreign exchange market are for ______________.
a. portfolio investments b. tourists c. businesses d. foreign direct investments
The invisible hand is a notion from:
a. Marx b. Ricardo c. Keynes d. Mises e. none of the above