Demand Curve Construction

What is an individual demand curve?

• A market demand curve

• An individual demand curve is a graphical representation of the relationship between the price of a good and the quantity demanded by an individual consumer.

• A production possibility curve

• An individual supply curve

Explain the law of demand in the context of demand curves.

• The law of demand explains the inverse relationship between price and quantity demanded, as shown by demand curves.

• The law of demand states that price and quantity demanded move in the same direction on a demand curve.

• Demand curves show a direct relationship between price and quantity demanded.

• According to the law of demand, as price increases, quantity demanded also increases.

How is the market demand curve derived from individual demand curves?

• By subtracting individual demand curves at each price level.

• By horizontally summing individual demand curves at each price level.

• By averaging individual demand curves at each price level.

• By vertically summing individual demand curves at each price level.

What factors can shift the demand curve?

• Changes in government policies

• Weather conditions

• Global economic trends

• Changes in consumer income, prices of related goods, consumer preferences, population demographics, and consumer expectations.

Describe the concept of elasticity of demand.

• Elasticity of demand is only applicable to luxury goods.

• Elasticity of demand is a measure of how much consumers are willing to pay for a product.

• The concept of elasticity of demand measures the responsiveness of quantity demanded to a change in price.

• The concept of elasticity of demand measures the responsiveness of quantity supplied to a change in price.

How does price elasticity affect the shape of the demand curve?

• Price elasticity causes the demand curve to shift vertically

• Price elasticity affects the shape of the demand curve by determining how responsive quantity demanded is to a change in price.

• Price elasticity has no impact on the shape of the demand curve

• Price elasticity makes the demand curve steeper

What is the difference between a movement along the demand curve and a shift of the demand curve?

• A movement along the demand curve is caused by a change in preferences, while a shift of the demand curve is caused by factors other than preferences.

• A movement along the demand curve is caused by a change in price, while a shift of the demand curve is caused by factors other than price.

• A movement along the demand curve is caused by a change in income, while a shift of the demand curve is caused by factors other than income.

• A movement along the demand curve is caused by a change in quantity, while a shift of the demand curve is caused by factors other than quantity.

Discuss the relationship between price and quantity demanded on a demand curve.

• Quantity demanded increases as price increases on a demand curve.

• Price and quantity demanded have an inverse relationship on a demand curve.

• Price has no impact on quantity demanded on a demand curve.

• Price and quantity demanded have a direct relationship on a demand curve.

Explain the concept of consumer surplus in relation to demand curves.

• Consumer surplus is the cost incurred by consumers when buying a product below the market price.

• Consumer surplus is the total revenue generated by consumers when purchasing a product at the maximum price they are willing to pay.

• Consumer surplus is the additional benefit or value that consumers receive when they are able to purchase a product for less than the maximum price they are willing to pay.

• Consumer surplus is the profit earned by producers when selling a product above the market price.

How does income level impact the shape of the demand curve?

• Income level impacts the shape of the demand curve by causing it to shift and change slope depending on the type of good (normal or inferior).

• Income level causes the demand curve to become a straight line

• Income level only impacts the color of the demand curve

• Income level has no impact on the demand curve shape