Understanding Demand Elasticity

What is the definition of demand?

• Demand is the total quantity of goods available in the market.

• Demand refers to the amount of goods produced by manufacturers.

• Demand is the price consumers are willing to pay for goods.

• Demand is the desire and ability of consumers to purchase goods or services.

How does price affect demand?

• Demand increases with price fluctuations, regardless of the direction of change.

• Price inversely affects demand; higher prices decrease demand, while lower prices increase demand.

• Higher prices increase demand while lower prices decrease demand.

• Price has no effect on demand; it remains constant regardless of price changes.

What is the formula to measure demand elasticity?

• Elasticity = (Price / Quantity Demanded) * 100

• Elasticity = (% Change in Price) / (% Change in Quantity Supplied)

• Elasticity = (% Change in Quantity Demanded) / (% Change in Price)

• Elasticity = (Total Revenue) / (Total Cost)

What are the conditions that affect demand?

• Production costs

• Consumer preferences, income levels, prices of related goods, consumer expectations, and demographic changes.

• Advertising strategies

• Weather conditions

How can demand be graphically represented?

• A line graph of profit margins.

• A demand curve on a graph.

• A pie chart showing sales data.

• A bar graph of production costs.

What is the relationship between price and quantity demanded?

• Inverse relationship: as price decreases, quantity demanded increases.

• No relationship: price changes do not affect quantity demanded.

• Direct relationship: as price increases, quantity demanded increases.

• Constant relationship: quantity demanded remains the same regardless of price changes.

What factors can cause a shift in the demand curve?

• Changes in weather patterns

• Improvements in technology

• Government regulations on production

• Factors that can cause a shift in the demand curve include changes in income, preferences, prices of related goods, population, consumer expectations, and advertising.

How does consumer preference influence demand?

• Consumer preference influences demand by increasing or decreasing the desire for specific products.

• Consumer preference has no effect on demand.

• Consumer preference only affects supply, not demand.

• Consumer preference is irrelevant to market trends.