Assuming a linear demand curve, we would expect lower prices to correspond with?

Answer 1

The graph is the relationship between price and quantities of goods.

Lower prices on your demand curve will be associated with higher quantities (demanded at those low prices)

High prices would corresponded with less quantities demanded.

Answer 2

A stock market crash.

Actually, if there was a linear demand curve, low prices would correspond with factors other than social changes. They could be caused by supply being controlled by a many people or companies, thus increasing competition. They could also be caused by glut of supply. In addition, low prices could reflect cheap materials needed to make the goods, in the same way high prices would reflect expensive materials.

Answer 3

Yes, small percentage changes in prices have smaller percentage effect on quantity demanded (elasticity low as people do not mind much when prices vary at low levels). But when the prices are already very high, a small percentage change in price is a big absolute change and is likely to have a bigger percentage impact on the quantity demanded (elasticity hgh). This is true of any type of market. However, what is sufficeintly high level of price may vary from commodity to commodity. Gasolene may be relatively in elastic at $3 level, but may be highly elastic at $9 level of price.

Answer 4

The demand curve has a negative slope, (going down a hill) this is because for a lower price a cusumer is typically willing to buy more quantity.

The Supply curver has a positive slope, (going up hill), this is because for a higher price a suppllier is typically willing to sell more quantity