Economics Today and Tomorrow, Student Edition
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN: 9780078747663
Author: McGraw-Hill
Publisher: Glencoe/McGraw-Hill School Pub Co
Question
Book Icon
Chapter 7, Problem 1AA
To determine

To explain: Demand using all the terms given in a paragraph.

Expert Solution & Answer
Check Mark

Explanation of Solution

Law of demand states that the quantity demanded (Qd) of a commodity or service and its prices are inversely associated with each other when other things remain the same. It means that when the price of a commodity rises, its quantity demand will fall and vice versa. Demand curve shows the association between the price and quantity demanded. It shows that how much commodities and services are demanded at a given level of price. The demand curve is a downward sloping line because of the law of diminishing returns to scale. This law states that when a person starts consuming more and more number of commodities and services, there utility or the level of satisfaction starts fall due to which they are less willing to pay for it. The price elasticity of demand influence the demand in an economy as it directly helps in measuring the amount of fall or rise in the quantity demanded when the price of the commodity rises or falls. Therefore, if the demand is more elastic, it means that with a smaller fall in the price of commodity, there will be a large increase in quantity demanded.

Economics Concept Introduction

Introduction: In microeconomics, the chapter of demand and supply occupies a significant position. The quantity of a product in the market is supply, and demand is the amount that people want to buy. Find a specific commodity, such as petrol. When there is a greater demand for gas but less for oil then there will be rise in price.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Text book image
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Text book image
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education