Question

1. what is the one and only thing that can cause a change in quantity demanded?
2. what factors would cause the shift shown in this graph below? (list all 6 - be specific)
3. what factors would cause the shift shown in the graph below? (list all 6 - be specific)
4. what kind of demand is it when a) a change in price causes a larger change in quantity demanded, b) a customers need for the product is not urgent, c) and there are enough substitutes for the consumer to switch back and forth to get the best price?
5. what kind of demand is it when a) a change in prices causes a relatively smaller change in demand, b) the purchase of the product cant be delayed, c) and there are not adequate substitutes to replace the product
6. what kind of demand does a change in price cause a proportional change in quantity demanded?
7. what are the three questions that help determine a products elasticity?
8. list two products that have elastic demand and two products that have inelastic demand.

c. what will happen to the cell phone market based on the headlines below and answer the questions.
headline demand shift? (y/n) does the curve shift left/right or movement along the curve? increase/decrease in demand, or change in quantity demanded? determinant(s) of demand (income, population, tastes, substitute, complement, tastes, expectations) or not applicable.

1. tourism into the us doubles
2. the price of a cell phone triples
3. cell phones are shown to cause brain injury.
4. price of cell phones expected to fall next month.
5. $100 dollars of free itunes with the purchase of a cell phone

Explanation:

1. A change in the price of the good itself is the only factor that can cause a change in quantity demanded. It leads to a movement along the demand - curve.

19 - 20. Without seeing the graphs, common factors that shift the demand curve include changes in income, population, tastes, prices of substitutes, prices of complements, and expectations.

1. Elastic demand occurs when a change in price causes a larger change in quantity demanded, the need is not urgent, and there are many substitutes.
2. Inelastic demand is when a change in price causes a relatively smaller change in demand, the purchase can't be delayed, and there are few substitutes.
3. Unit - elastic demand is when a change in price causes a proportional change in quantity demanded.
4. The three questions are: 1) Is the good a necessity or a luxury? 2) Are there available substitutes? 3) How much time is available to adjust to the price change?
5. Elastic demand products: restaurant meals, movie tickets. Inelastic demand products: gasoline, prescription drugs.
6. Demand shift: Y; Shift direction: RIGHT; Change in demand: Increase; Determinant: Population (more tourists means more potential cell - phone buyers).
7. Demand shift: N; Movement: Along the curve (upward and to the left); Change in quantity demanded: Decrease; Determinant: Price.
8. Demand shift: Y; Shift direction: LEFT; Change in demand: Decrease; Determinant: Tastes (negative health - related perception changes taste against cell - phones).
9. Demand shift: Y; Shift direction: LEFT; Change in demand: Decrease; Determinant: Expectations (expecting lower prices in the future reduces current demand).
10. Demand shift: Y; Shift direction: RIGHT; Change in demand: Increase; Determinant: Complements (free iTunes is a complementary benefit to cell - phone purchase).

Answer:

1. A change in the price of the good itself.

19 - 20. Income, population, tastes, prices of substitutes, prices of complements, expectations.

1. Elastic demand.
2. Inelastic demand.
3. Unit - elastic demand.
4. Is the good a necessity or a luxury? Are there available substitutes? How much time is available to adjust to the price change?
5. Elastic demand: restaurant meals, movie tickets. Inelastic demand: gasoline, prescription drugs.
6. Y, RIGHT, Increase, Population
7. N, Along the curve, Decrease, Price
8. Y, LEFT, Decrease, Tastes
9. Y, LEFT, Decrease, Expectations
10. Y, RIGHT, Increase, Complements