Explain the law of demand and the inverse relation between demand and price .

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Answer 1

Question

Chapter 4, Problem 1QE

To determine

Explain the law of demand and the inverse relation between demand and price.

Expert Solution & Answer

Explanation of Solution

According to the law of demand, demand decreases when the price increases and vice versa. This inverse relation between demand and price is due to the reason that when the price of a commodity decreases, it increases the purchasing power of people and they can buy more with a small price. Also, people have a tendency to switch their preference and substitute other goods for the need if the price of a good increases. These goods are known as normal goods. Sometimes the demand for goods increase with increasing price, and it is a violation of the law of demand, for example, Giffen goods.

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ECON 2106: Microeconomics I Fall - 2023 Algoma University Homework # 2 (Due: October 19, 2023) 1. The market demand for cashmere socks is given by Q = 1,000 + 0.5I – 400P + 200P’ Where, Q = Annual demand in number of pairs I = Average income I dollars per year P = Price of one pair of cashmere shocks P’ = Price of one pair of wool shocks Given that I = ECON 2106: Microeconomics I Fall - 2023 Algoma University Homework # 2 (Due: October 19, 2023) 1. The market demand for cashmere socks is given by Q = 1,000 + 0.5I – 400P + 200P’ Where, Q = Annual demand in number of pairs I = Average income I dollars per year P = Price of one pair of cashmere shocks P’ = Price of one pair of wool shocks Given that I = $20,000, P = $10, and P’ = $5, determine ƐQP, ƐQI, and ƐQP’.

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Answer 2

Question

Chapter 4, Problem 1QE

To determine

Explain the law of demand and the inverse relation between demand and price.

Expert Solution & Answer

Explanation of Solution

According to the law of demand, demand decreases when the price increases and vice versa. This inverse relation between demand and price is due to the reason that when the price of a commodity decreases, it increases the purchasing power of people and they can buy more with a small price. Also, people have a tendency to switch their preference and substitute other goods for the need if the price of a good increases. These goods are known as normal goods. Sometimes the demand for goods increase with increasing price, and it is a violation of the law of demand, for example, Giffen goods.

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Answer 3

Question

Chapter 4, Problem 1QE

To determine

Explain the law of demand and the inverse relation between demand and price.

Expert Solution & Answer

Explanation of Solution

According to the law of demand, demand decreases when the price increases and vice versa. This inverse relation between demand and price is due to the reason that when the price of a commodity decreases, it increases the purchasing power of people and they can buy more with a small price. Also, people have a tendency to switch their preference and substitute other goods for the need if the price of a good increases. These goods are known as normal goods. Sometimes the demand for goods increase with increasing price, and it is a violation of the law of demand, for example, Giffen goods.

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Answer 4

Question

Chapter 4, Problem 1QE

To determine

Explain the law of demand and the inverse relation between demand and price.

Expert Solution & Answer

Explanation of Solution

According to the law of demand, demand decreases when the price increases and vice versa. This inverse relation between demand and price is due to the reason that when the price of a commodity decreases, it increases the purchasing power of people and they can buy more with a small price. Also, people have a tendency to switch their preference and substitute other goods for the need if the price of a good increases. These goods are known as normal goods. Sometimes the demand for goods increase with increasing price, and it is a violation of the law of demand, for example, Giffen goods.

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Answer 5

Chapter 4, Problem 1QE

To determine

Explain the law of demand and the inverse relation between demand and price.

Expert Solution & Answer

Explanation of Solution

According to the law of demand, demand decreases when the price increases and vice versa. This inverse relation between demand and price is due to the reason that when the price of a commodity decreases, it increases the purchasing power of people and they can buy more with a small price. Also, people have a tendency to switch their preference and substitute other goods for the need if the price of a good increases. These goods are known as normal goods. Sometimes the demand for goods increase with increasing price, and it is a violation of the law of demand, for example, Giffen goods.

Answer 6

Chapter 4, Problem 1QE

To determine

Explain the law of demand and the inverse relation between demand and price.

Expert Solution & Answer

Explanation of Solution

According to the law of demand, demand decreases when the price increases and vice versa. This inverse relation between demand and price is due to the reason that when the price of a commodity decreases, it increases the purchasing power of people and they can buy more with a small price. Also, people have a tendency to switch their preference and substitute other goods for the need if the price of a good increases. These goods are known as normal goods. Sometimes the demand for goods increase with increasing price, and it is a violation of the law of demand, for example, Giffen goods.

Answer 7

Chapter 4, Problem 1QE

To determine

Explain the law of demand and the inverse relation between demand and price.

Answer 8

Expert Solution & Answer

Explanation of Solution

According to the law of demand, demand decreases when the price increases and vice versa. This inverse relation between demand and price is due to the reason that when the price of a commodity decreases, it increases the purchasing power of people and they can buy more with a small price. Also, people have a tendency to switch their preference and substitute other goods for the need if the price of a good increases. These goods are known as normal goods. Sometimes the demand for goods increase with increasing price, and it is a violation of the law of demand, for example, Giffen goods.