Ch4 Practice

Ch4 Practice - Ch. 4 Practice 1. a. State Andron's Law of...

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1. a. State Andron’s Law of Demand. b. What will cause quantity demanded to rise? A change in quantity demanded is caused by a change in price only. Remember that a change in anything besides price that affects demand shifts the demand curve. c. Draw a demand curve and demonstrate graphically the effect of a change in price on quantity demanded. The first step to answering this question is to label the axes correctly. Make sure the price of the good is on the vertical axis and quantity is on the horizontal axis. The next step is to draw the curve correctly so that it reflects the appropriate relationship. A demand curve slopes downward reflecting the inverse relationship between the price and the quantity demanded (which is the law of demand). Lastly, you're asked to show the effect of a change in price. Remember, a change in price results in a movement along the curve. Choose a point on the demand curve and label it A. Draw lines to the price and quantity axis and label them P 0 and Q 0 respectively. Let's show a rise in price. Choose a higher price (label it P1) and draw a horizontal line to the demand curve. Label this point B. Drop a line to the quantity axis and label it Q1. This is the new quantity and price. A movement from point A to point B demonstrates a movement up along a demand curve. All of this is illustrated in the graph.
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Ch4 Practice - Ch. 4 Practice 1. a. State Andron's Law of...

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