Topics: Supply and demand, Economics, Elasticity Pages: 4 (335 words) Published: July 15, 2015
University of Phoenix Material

Economics - Definitions

Law of Demand

The law tells that if price of good increase the demand of consumer decrease and vice versa. [Investopedia (2015)]

Law of Supply

According to this concept if the price paid by consumers rises, the suppliers increase the supply of the good. [Economictimes (2015)]

Price Elasticity of Demand

It is a relationship of measuring change in quantity of demand of any good and the change in price of that good. The formula to measure it is that Price elasticity of demand=% change in demanded quantity/ %change in price. [Economics online (2015)]

It is a field that studies about the direction of economy as a whole and not according to individual. It studies about the national income, rate of growth and price levels. [Investopedia (2015)]


It is about the factors effecting the individual economic choices, how the changes effects the individual decisions and not of the aggregate of economy. The include of theory of demand, theory of firm and demand of labor comes under microeconomics. [Business dictionary (2015)]

Identify 2 Products whose demand is price elastic.

I. Petrol
II. Diamonds [Economicshelp (2015)]

Identify 2 products whose demand is price inelastic.

I. Milk Powder
II. Instant Coffee [Economicshelp (2015)]

Which of the following graphs best demonstrates the law of demand?

a) I
b) II
c) III
d) IV
Ans: D [Investopedia (2015)]

Which of the following graphs best demonstrates the law of supply?

a) I
b) II
c) III
d) IV
Ans: C [Economictimes (2015)]

Investopedia (2015).Law of demand. (WEB) Retrieved from:
Economic times (2015).Law of supply. (WEB) Retrieved from: Economic Online(2015).Price elasticity of demand (WEB) Retrieved from:...
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