To make the concept of demand clearer, entitle the following examples of the main economic concepts concerning it. Answer the questions.

Figure 1.

1._______________________________

To see how an economist would analyze demand, look at Panel A in Figure 1.It shows the amount of a product that a consumer, whom we’ll call Mike, would be willing and able to purchase over a range of possible prices that go from $5 to $30.

ü How many units of a product would Mike buy at a price of $25 or $30?

ü How many units would he buy if the price fell to $20?

ü How many would he buy if the price was $15?

ü Is he willing to buy more units of a product as the price gets lower? What about you?

2._______________________________

Point ain Panel B shows that Mike purchased three items of a product at a price of $15 each, while point bshows that he will buy five at a price of $10. The demand schedule and the demand curve are similar in that they both show the same information - one in the form of a table and the other in the form of a graph.

ü What differs the demand curve and the demand schedule?

ü What makes them similar?

ü Why is the demand curve downward sloping?

3. _____________________________

We might want to know how many people would want to see a movie on a given afternoon if the price was $5. Or we might want to know how many would want to view it if the price was $10. The answers would depend on a number of things, including the number of people living in the area, the number and types of other movies that were playing at the same time, and of course the popularity of the movie itself. But in the end, everything would be measured in terms of prices and quantities.

ü Can any other factors influence the number of people willing to see a movie? What are they?

ü Can you illustrate this economic concept by your own example?

4. ___________________________

The prices and quantities in Figure 1 point out a feature of demand: for practically every good or service that we might buy, higher prices are associated with smaller amounts demanded. Conversely, lower prices are associated with larger amounts demanded.

ü What happens with the quantity demanded when the price of something goes up?

ü What happens with the quantity demanded when the price of something goes down?

5. ___________________________

When you buy a drink because you are thirsty, you get the most satisfaction from the first purchase. Since you are now less thirsty, you get less satisfaction from the second purchase, and even less from the next, so you are not willing to pay as much for the second and third purchases.

ü When you buy clothes, why do you prefer a variety of colors and styles to identical items?

Date: 2016-01-14; view: 761