Question: Why does an economist create a market demand schedule?

Answer: to predict how people will change their buying habits when prices change

Question: Which is an example of the law of demand at work?

-Demand for pizza rises when the price of pizza falls.

-The price of pizza goes up when the price of cheese goes up.

-The price of pizza falls when demand for pizza falls.

-Demand for pizza goes down when tacos become more popular.

Answer: Demand for pizza rises when the price of pizza falls

Question: If prices rise and income stays the same, what is the effect on demand?

Answer: Fewer goods are bought.

Question: How does the substitution effect work when the price of an item drops?

Answer: Consumers buy the item as a substitute for other things.

Question: If prices rise but income stays the same, what is the effect on the quantity demanded?

Answer: Fewer goods are bought.

Question: What happens when the price of Item A increases?

Answer: Consumers buy the cheaper Item B as a substitute for Item

Question: How can expectations about the future change consumer behavior?

Answer: Immediate demand for a good will rise if its price is expected to rise.

Question: How might advertising lead to a shift in the demand curve?

Answer: by helping to create fads and trends

Question: How can the demand for one good be affected by increased demand for another one?

Answer: If goods are used together, increased demand for one will increase demand for the other.

Question: How can expectations about the future change what consumers buy now?

Answer: Demand for a good will go up if its price is expected to rise.