HGov-APMacro: Demand

1 demand-wordcloud
Learning Target: Explain how demand represent economic activity.

In a market economy, buyers and sellers set prices. Demand is the amount of something that consumers are willing and able to buy at various prices. Demand does not always stay the same and can be determined by a demand schedule, which shows the various quantities demanded of a particular product at all prices that might prevail in the market at a given time.

The Law of Demand states that people will buy more of a product at a lower price than they will buy at a higher price, if nothing else changes. Real income, possible substitutes, and diminishing marginal utility help explain the inverse relationship between price and quantity demanded. Demand does not always stay the same.

A demand curve is the graph that shows the relationship between the price of an item and the quantity demanded. A change in the quantity demanded is a result of a change in price.

Demand elasticity is a measure of how responsive consumers are to changes in price. Demand elasticity is influenced by such factors as the availability of substitutes, the product’s price relative to income, whether the product is a necessity or a luxury, and the time needed to adjust to a price change. For elastic demand, a rise or fall in price of a good greatly affects the amount people are willing to buy. Demand is inelastic if a change in price does not result in a substantial change in the quantity demanded. Consumers are not flexible and will purchase the item no matter what it costs.


Econ: Country Presentation Prep

Each team will prepare a short presentation of their country. The information required are: name of your country, its classification, why should other countries trade and/or form trade alliances with you, and D3s make a case for your country to receive foreign aid.