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Chapter 3: Problem 8

What does a sale on shirts have to do with the law of demand (as applied to shirts)?

Short Answer

Expert verified
A sale on shirts relates directly to the law of demand. As prices decrease due to the sale, demand for shirts increases, assuming all other variables remain constant.

Step by step solution

01

Define the Law of Demand

The law of demand is a fundamental concept in economics. It postulates that, assuming all other factors remain constant, as the price of a good or service increases, consumer demand for it decreases, and vice versa.
02

Apply the law of demand to the sale situation

Let's imagine a situation in which a clothing store reduces the price of shirts during a sale. According to the law of demand, the price reduction should increase the quantity of shirts customers are willing to buy, assuming everything else stays the same.
03

Finalize the connection

Therefore, a sale on shirts is directly linked to the law of demand. By lowering the prices, the retailer stimulates increased demand among consumers.

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Most popular questions from this chapter

Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping. Now suppose demand rises. Will producers' surplus rise or fall? Explain your answers.

Explain how the market moves to equilibrium in terms of shortages and surpluses and in terms of maximum buying prices and minimum selling prices.

What is the difference between a movement factor and a shift factor?

Identify what happens to equilibrium price and quantity in each of the following cases: a. Demand rises and supply is constant. b. Demand falls and supply is constant. c. Supply rises and demand is constant. d. Supply falls and demand is constant. e. Demand rises by the same amount that supply falls. f. Demand falls by the same amount that supply rises. g. Demand falls less than supply rises. h. Demand rises more than supply rises. i. Demand rises less than supply rises. j. Demand falls more than supply falls. k. Demand falls less than supply falls.

In the previous chapter, you learned about the law of increasing opportunity costs. What does this law have to do with an upward-sloping supply curve?
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