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Chapter 3: Q. 13 (page 78)

What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?

Short Answer

Expert verified

Buyers will demand less.

Step by step solution

01

Step1. Introduction

Demand curve depicts the relationship between the quantity demanded at various level of prices.

02

Step2. Explanation

As the prices increase, the people will demand less. Likewise, at lower price level, quantity demanded will be higher. This implies an inverse relationship between the price and quantity demanded. Hence, a downward sloping demand curve indicate that people will demand less at higher prices.

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Most popular questions from this chapter

Suppose the price of gasoline is \(1.60 per gallon. Is the quantity demanded higher or lower than at the equilibrium price of \)1.40 per gallon?

Table 3.8 shows the information on the demand and supply for bicycles, where the quantities of bicycles are measured in thousands.

PriceQdQs
\(1205036
\)1504040
\(1803248
\)2102856
\(2402470

(a) What is the quantity demanded and quantity supplied at a price of \)120?

(b) At what price is the quantity supplied equal to 48,000?

(c) Graph the demand and supply curves for bicycles. How can you determine the equilibrium price and quantity from the graph? How can you determine the equilibrium price and quantity from the table? What are the equilibrium price and the equilibrium quantity?

(d) If the price was $120, what would the quantities demanded and supplied be? Would a shortage or surplus exist? If so, how large would the shortage or surplus be?

Can you propose a policy that would induce the

market to supply more rental housing units?

Why would a free market never operate at a quantity greater than the equilibrium quantity?

What is consumer surplus? How is it illustrated on

a demand and supply diagram?
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