AP Microeconomics 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 Microeconomics.

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: What is the formula for calculating percentage change?

Answer: $\frac{\text{New Value} - \text{Old Value}}{\text{Old Value}} \times 100$. Standard formula for elasticity calculations.

Flashcard 2: What does a negative income elasticity indicate?

Answer: The good is an inferior good. Demand decreases as income rises.

Flashcard 3: What is the formula for calculating percentage change?

Answer: $\frac{\text{New Value} - \text{Old Value}}{\text{Old Value}} \times 100$. Standard formula for elasticity calculations.

Flashcard 4: What does a positive cross-price elasticity indicate?

Answer: The goods are substitutes. Price increases in one good boost demand for the other.

Flashcard 5: Identify the effect of a substitute's price increase on demand.

Answer: Demand for the good increases. Consumers switch to the now relatively cheaper good.

Flashcard 6: How does a change in consumer expectations of income affect demand?

Answer: Expectation of higher income increases demand. Future income optimism encourages current spending.

Flashcard 7: How does a change in consumer taste affect demand?

Answer: The demand curve shifts. Preference changes alter willingness to buy.

Flashcard 8: Identify the type of elasticity when $E_d = 1$.

Answer: Unitary elastic. Quantity changes proportionally equal to price.

Flashcard 9: How does consumer expectation of future price affect current demand?

Answer: Expectation of a price increase raises current demand. Consumers buy now to avoid higher future prices.

Flashcard 10: What is the law of demand?

Answer: As price decreases, quantity demanded increases. This fundamental relationship reflects diminishing marginal utility.

Flashcard 11: What does a positive income elasticity indicate?

Answer: The good is a normal good. Demand increases as income rises.

Flashcard 12: What factors shift the demand curve?

Answer: Income, tastes, prices of related goods, expectations, number of buyers. These are non-price determinants that cause entire curve shifts.

Flashcard 13: Define income elasticity of demand.

Answer: Measures how quantity demanded changes in response to income changes. Shows whether goods are normal or inferior.

Flashcard 14: What is the elasticity of demand for a necessity with few substitutes?

Answer: Inelastic. Essential goods with few alternatives have low elasticity.

Flashcard 15: What is the effect of an advertising campaign on demand?

Answer: It can increase demand. Advertising influences consumer preferences and awareness.

Flashcard 16: What does a steep demand curve indicate about elasticity?

Answer: Demand is inelastic. Steep curves show low price sensitivity.

Flashcard 17: What is the effect of an advertising campaign on demand?

Answer: It can increase demand. Advertising influences consumer preferences and awareness.

Flashcard 18: How is consumer surplus represented on a demand curve graph?

Answer: The area above the price line and below the demand curve. Represents consumer benefit from market participation.

Flashcard 19: What is the elasticity of demand for a necessity with few substitutes?

Answer: Inelastic. Essential goods with few alternatives have low elasticity.

Flashcard 20: Define quantity demanded.

Answer: The amount of a good consumers are willing to buy at a specific price. This is demand at a single price point, not the entire curve.

Flashcard 21: What does a positive income elasticity indicate?

Answer: The good is a normal good. Demand increases as income rises.

Flashcard 22: What is the slope of a perfectly inelastic demand curve?

Answer: Vertical slope. Quantity demanded doesn't change with price.

Flashcard 23: How does an increase in income affect demand for a normal good?

Answer: Demand increases. Higher income allows more consumption of desired goods.

Flashcard 24: What is cross-price elasticity of demand?

Answer: Measures how the quantity demanded of one good responds to a price change of another good. Also called cross-price elasticity coefficient.

Flashcard 25: What is the law of demand?

Answer: As price decreases, quantity demanded increases. This fundamental relationship reflects diminishing marginal utility.

Flashcard 26: What does a positive cross-price elasticity indicate?

Answer: The goods are substitutes. Price increases in one good boost demand for the other.

Flashcard 27: How does time affect elasticity of demand?

Answer: Demand becomes more elastic over time. Consumers find more substitutes over longer periods.

Flashcard 28: Identify the effect of a population increase on market demand.

Answer: Market demand increases. More consumers in the market increase total demand.

Flashcard 29: How is consumer surplus represented on a demand curve graph?

Answer: The area above the price line and below the demand curve. Represents consumer benefit from market participation.

Flashcard 30: How does the availability of substitutes affect demand elasticity?

Answer: More substitutes increase elasticity. More alternatives make consumers price-sensitive.

Flashcard 31: What does a movement along the demand curve indicate?

Answer: Change in quantity demanded due to price change. Price is the only factor changing, not demand determinants.

Flashcard 32: What does the midpoint method calculate?

Answer: Elasticity without using initial values as base. Uses average of start and end values as base.

Flashcard 33: What does a negative cross-price elasticity indicate?

Answer: The goods are complements. Price increases in one good reduce demand for the other.

Flashcard 34: How does an increase in income affect demand for an inferior good?

Answer: Demand decreases. Higher income leads to substitution away from lower-quality goods.

Flashcard 35: How does a change in consumer taste affect demand?

Answer: The demand curve shifts. Preference changes alter willingness to buy.

Flashcard 36: Define quantity demanded.

Answer: The amount of a good consumers are willing to buy at a specific price. This is demand at a single price point, not the entire curve.

Flashcard 37: What is the slope of a perfectly elastic demand curve?

Answer: Horizontal slope. Consumers extremely sensitive to price changes.

Flashcard 38: How does an increase in income affect demand for a normal good?

Answer: Demand increases. Higher income allows more consumption of desired goods.

Flashcard 39: What is a demand schedule?

Answer: A table showing the relationship between price and quantity demanded. Shows price-quantity pairs in tabular format before graphing.

Flashcard 40: What is the slope of a perfectly elastic demand curve?

Answer: Horizontal slope. Consumers extremely sensitive to price changes.

Flashcard 41: If the price elasticity of demand is greater than 1, demand is considered what?

Answer: Elastic. Quantity changes proportionally more than price.

Flashcard 42: What is the difference between a change in demand and a change in quantity demanded?

Answer: Change in demand shifts the curve; change in quantity demanded moves along the curve. Shifts involve non-price factors; movements involve price changes.

Flashcard 43: Identify the type of elasticity when $E_d = 1$.

Answer: Unitary elastic. Quantity changes proportionally equal to price.

Flashcard 44: What happens to total revenue when price rises and demand is elastic?

Answer: Total revenue decreases. Large quantity decrease outweighs the price increase.

Flashcard 45: What does the midpoint method calculate?

Answer: Elasticity without using initial values as base. Uses average of start and end values as base.

Flashcard 46: How does a change in consumer expectations of income affect demand?

Answer: Expectation of higher income increases demand. Future income optimism encourages current spending.

Flashcard 47: How does the availability of substitutes affect demand elasticity?

Answer: More substitutes increase elasticity. More alternatives make consumers price-sensitive.

Flashcard 48: How does time affect elasticity of demand?

Answer: Demand becomes more elastic over time. Consumers find more substitutes over longer periods.

Flashcard 49: What is the difference between a change in demand and a change in quantity demanded?

Answer: Change in demand shifts the curve; change in quantity demanded moves along the curve. Shifts involve non-price factors; movements involve price changes.

Flashcard 50: Describe the shape of a typical demand curve.

Answer: Downward sloping from left to right. Reflects the inverse price-quantity relationship of demand.

Flashcard 51: Identify the effect of a population increase on market demand.

Answer: Market demand increases. More consumers in the market increase total demand.

Flashcard 52: What does a steep demand curve indicate about elasticity?

Answer: Demand is inelastic. Steep curves show low price sensitivity.

Flashcard 53: What does a negative income elasticity indicate?

Answer: The good is an inferior good. Demand decreases as income rises.

Flashcard 54: Identify the effect of a complement's price increase on demand.

Answer: Demand for the good decreases. Higher complement prices make the bundle more expensive.

Flashcard 55: Identify the effect of a tax on consumer goods.

Answer: Decreases demand for the taxed good. Higher prices discourage consumption through tax burden.

Flashcard 56: What is cross-price elasticity of demand?

Answer: Measures how the quantity demanded of one good responds to a price change of another good. Also called cross-price elasticity coefficient.

Flashcard 57: What is the formula for price elasticity of demand?

Answer: $E_d = \frac{\%\Delta Q_d}{\%\Delta P}$. Measures responsiveness of quantity to price changes.

Flashcard 58: What is the formula for price elasticity of demand?

Answer: $E_d = \frac{\%\Delta Q_d}{\%\Delta P}$. Measures responsiveness of quantity to price changes.

Flashcard 59: What does a negative cross-price elasticity indicate?

Answer: The goods are complements. Price increases in one good reduce demand for the other.

Flashcard 60: Describe the shape of a typical demand curve.

Answer: Downward sloping from left to right. Reflects the inverse price-quantity relationship of demand.

Flashcard 61: If the price elasticity of demand is greater than 1, demand is considered what?

Answer: Elastic. Quantity changes proportionally more than price.

Flashcard 62: How does an increase in income affect demand for an inferior good?

Answer: Demand decreases. Higher income leads to substitution away from lower-quality goods.

Flashcard 63: Identify the effect of a complement's price increase on demand.

Answer: Demand for the good decreases. Higher complement prices make the bundle more expensive.

Flashcard 64: What does a movement along the demand curve indicate?

Answer: Change in quantity demanded due to price change. Price is the only factor changing, not demand determinants.

Flashcard 65: Define income elasticity of demand.

Answer: Measures how quantity demanded changes in response to income changes. Shows whether goods are normal or inferior.

Flashcard 66: How does consumer expectation of future price affect current demand?

Answer: Expectation of a price increase raises current demand. Consumers buy now to avoid higher future prices.

Flashcard 67: What is the slope of a perfectly inelastic demand curve?

Answer: Vertical slope. Quantity demanded doesn't change with price.

Flashcard 68: Identify the effect of a substitute's price increase on demand.

Answer: Demand for the good increases. Consumers switch to the now relatively cheaper good.

Flashcard 69: What is a demand schedule?

Answer: A table showing the relationship between price and quantity demanded. Shows price-quantity pairs in tabular format before graphing.

Flashcard 70: What happens to total revenue when price rises and demand is elastic?

Answer: Total revenue decreases. Large quantity decrease outweighs the price increase.

Flashcard 71: What factors shift the demand curve?

Answer: Income, tastes, prices of related goods, expectations, number of buyers. These are non-price determinants that cause entire curve shifts.

Flashcard 72: What happens to demand when a subsidy is introduced?

Answer: Demand typically increases. Lower effective prices make goods more affordable.

Flashcard 73: Identify the effect of a tax on consumer goods.

Answer: Decreases demand for the taxed good. Higher prices discourage consumption through tax burden.

Flashcard 74: What happens to demand when a subsidy is introduced?

Answer: Demand typically increases. Lower effective prices make goods more affordable.