AP Macroeconomics Flashcards: Demand

What this deck covers

This deck focuses on Demand, giving you a quick way to review the definitions, rules, and examples that matter most for AP Macroeconomics.

How to use these flashcards

Work through these flashcards in short sessions. Try to answer each prompt before flipping the card, then revisit any cards you miss until the explanation feels automatic.

Flashcard 1: Identify the slope of a typical demand curve.

Answer: Negative slope. Reflects the inverse relationship between price and quantity demanded.

Flashcard 2: Identify a factor that affects elasticity of demand.

Answer: Availability of substitutes. More substitutes make demand more responsive to price changes.

Flashcard 3: What type of demand exists if $E_d > 1$?

Answer: Elastic demand. Quantity demanded responds strongly to price changes.

Flashcard 4: What is the law of demand?

Answer: As price decreases, quantity demanded increases, ceteris paribus. This fundamental economic principle describes the inverse price-quantity relationship.

Flashcard 5: What is the formula for total revenue?

Answer: Total Revenue = $Price \times Quantity$. Calculates total income generated from sales.

Flashcard 6: What is the horizontal axis on a demand curve graph?

Answer: Quantity demanded. Quantity is the independent variable in demand analysis.

Flashcard 7: Define 'complementary goods'.

Answer: Goods that are consumed together. These goods have joint consumption patterns like coffee and cream.

Flashcard 8: What does a positive cross-price elasticity indicate?

Answer: Substitute goods. Price increase in one good boosts demand for its substitute.

Flashcard 9: Identify the term for a change in demand due to factors other than price.

Answer: Shift in the demand curve. Represents movement of the entire demand curve.

Flashcard 10: What is the formula for calculating price elasticity of demand?

Answer: $E_d = \frac{\% \text{change in quantity demanded}}{\% \text{change in price}}$. Measures responsiveness of quantity demanded to price changes.

Flashcard 11: What type of demand exists if $E_d < 1$?

Answer: Inelastic demand. Quantity demanded responds weakly to price changes.

Flashcard 12: What is the formula for calculating price elasticity of demand?

Answer: $E_d = \frac{\% \text{change in quantity demanded}}{\% \text{change in price}}$. Measures responsiveness of quantity demanded to price changes.

Flashcard 13: Which factor causes a shift in the demand curve?

Answer: Change in consumer income, tastes, or prices of related goods. Non-price factors shift the entire curve left or right.

Flashcard 14: What type of demand exists if $E_d < 1$?

Answer: Inelastic demand. Quantity demanded responds weakly to price changes.

Flashcard 15: Identify the term for a change in quantity demanded due to a price change.

Answer: Movement along the demand curve. Represents movement along the existing demand curve.

Flashcard 16: Which factor causes a shift in the demand curve?

Answer: Change in consumer income, tastes, or prices of related goods. Non-price factors shift the entire curve left or right.

Flashcard 17: What does a negative cross-price elasticity indicate?

Answer: Complementary goods. Price increase in one good reduces demand for its complement.

Flashcard 18: Define 'income elasticity of demand'.

Answer: Measure of how the quantity demanded changes as consumer income changes. Shows how demand responds to changes in consumer purchasing power.

Flashcard 19: Identify the term for a change in demand due to factors other than price.

Answer: Shift in the demand curve. Represents movement of the entire demand curve.

Flashcard 20: What is a demand schedule?

Answer: A table showing the quantity demanded at various prices. It displays the relationship between price levels and corresponding quantities.

Flashcard 21: What is a demand curve?

Answer: A graph showing the relationship between price and quantity demanded. It visually represents the demand schedule data as a downward-sloping line.

Flashcard 22: Define 'cross-price elasticity of demand'.

Answer: Measure of how the quantity demanded of one good changes as the price of another good changes. Shows how demand for one good responds to another good's price.

Flashcard 23: What type of demand exists if $E_d > 1$?

Answer: Elastic demand. Quantity demanded responds strongly to price changes.

Flashcard 24: Which factor causes a movement along the demand curve?

Answer: Change in the price of the good. Only price changes cause movement along the curve, not shifts.

Flashcard 25: What is the vertical axis on a demand curve graph?

Answer: Price. Price is the dependent variable in demand analysis.

Flashcard 26: Define 'income elasticity of demand'.

Answer: Measure of how the quantity demanded changes as consumer income changes. Shows how demand responds to changes in consumer purchasing power.

Flashcard 27: What is the effect on total revenue if demand is inelastic and price increases?

Answer: Total revenue increases. Consumers don't significantly reduce purchases despite higher prices.

Flashcard 28: What does a positive cross-price elasticity indicate?

Answer: Substitute goods. Price increase in one good boosts demand for its substitute.

Flashcard 29: What type of demand exists if $E_d = 1$?

Answer: Unitary elastic demand. Percentage change in quantity equals percentage change in price.

Flashcard 30: What happens to demand when the price of a complement decreases?

Answer: Demand for the other good increases. Lower complement prices increase consumption of both goods together.

Flashcard 31: Define 'substitute goods'.

Answer: Goods that can replace each other in consumption. When one good's price rises, consumers switch to the substitute.

Flashcard 32: What is the effect on total revenue if demand is inelastic and price increases?

Answer: Total revenue increases. Consumers don't significantly reduce purchases despite higher prices.

Flashcard 33: Identify the slope of a typical demand curve.

Answer: Negative slope. Reflects the inverse relationship between price and quantity demanded.

Flashcard 34: What is the effect on total revenue if demand is elastic and price increases?

Answer: Total revenue decreases. Consumers reduce purchases significantly when elastic goods become pricier.

Flashcard 35: What does a negative income elasticity indicate for a good?

Answer: Inferior good. Demand decreases as income rises for these goods.

Flashcard 36: Define 'ceteris paribus'.

Answer: Ceteris paribus means 'all other things being equal'. This Latin phrase ensures other variables remain constant in economic analysis.

Flashcard 37: What type of demand exists if $E_d = 1$?

Answer: Unitary elastic demand. Percentage change in quantity equals percentage change in price.

Flashcard 38: What happens to demand when the price of a complement decreases?

Answer: Demand for the other good increases. Lower complement prices increase consumption of both goods together.

Flashcard 39: What does a positive income elasticity indicate for a good?

Answer: Normal good. Demand increases as income rises for these goods.

Flashcard 40: What is the horizontal axis on a demand curve graph?

Answer: Quantity demanded. Quantity is the independent variable in demand analysis.

Flashcard 41: Define 'complementary goods'.

Answer: Goods that are consumed together. These goods have joint consumption patterns like coffee and cream.

Flashcard 42: What is the law of demand?

Answer: As price decreases, quantity demanded increases, ceteris paribus. This fundamental economic principle describes the inverse price-quantity relationship.

Flashcard 43: What is a demand schedule?

Answer: A table showing the quantity demanded at various prices. It displays the relationship between price levels and corresponding quantities.

Flashcard 44: Identify the term for a change in quantity demanded due to a price change.

Answer: Movement along the demand curve. Represents movement along the existing demand curve.

Flashcard 45: What does a negative income elasticity indicate for a good?

Answer: Inferior good. Demand decreases as income rises for these goods.

Flashcard 46: What does a negative cross-price elasticity indicate?

Answer: Complementary goods. Price increase in one good reduces demand for its complement.

Flashcard 47: Define 'substitute goods'.

Answer: Goods that can replace each other in consumption. When one good's price rises, consumers switch to the substitute.

Flashcard 48: What is a demand curve?

Answer: A graph showing the relationship between price and quantity demanded. It visually represents the demand schedule data as a downward-sloping line.

Flashcard 49: Which factor causes a movement along the demand curve?

Answer: Change in the price of the good. Only price changes cause movement along the curve, not shifts.

Flashcard 50: What does a positive income elasticity indicate for a good?

Answer: Normal good. Demand increases as income rises for these goods.

Flashcard 51: Identify the main reason for a downward-sloping demand curve.

Answer: Law of diminishing marginal utility. Additional utility decreases as consumption increases.

Flashcard 52: Identify the main reason for a downward-sloping demand curve.

Answer: Law of diminishing marginal utility. Additional utility decreases as consumption increases.

Flashcard 53: Define 'cross-price elasticity of demand'.

Answer: Measure of how the quantity demanded of one good changes as the price of another good changes. Shows how demand for one good responds to another good's price.

Flashcard 54: What is the vertical axis on a demand curve graph?

Answer: Price. Price is the dependent variable in demand analysis.

Flashcard 55: What is the formula for total revenue?

Answer: Total Revenue = $Price \times Quantity$. Calculates total income generated from sales.

Flashcard 56: Define 'ceteris paribus'.

Answer: Ceteris paribus means 'all other things being equal'. This Latin phrase ensures other variables remain constant in economic analysis.

Flashcard 57: What is the effect on total revenue if demand is elastic and price increases?

Answer: Total revenue decreases. Consumers reduce purchases significantly when elastic goods become pricier.

Flashcard 58: Identify a factor that affects elasticity of demand.

Answer: Availability of substitutes. More substitutes make demand more responsive to price changes.