demand

Question 1

demand

Answer 1

the quantity of a good or service consumers are

• willing to buy
• able to buy
• at a price
• over a given period of time.

-demand varies with price. generally, the lower the price, the more affordable the good and so consumer demand increases.

Question 2

individual demand

Answer 2

the demand of one consumer

Question 3

market demand

Answer 3

the total demand of all consumers

Question 4

the law of demand

Answer 4

when goods are cheap, people buy more.

when goods are expensive, people buy less.

Question 5

why demand changes?

Answer 5

-taste and fashion
-price of related goods
-income
-population
other factors

Question 6

what are the ‘other factors’?

Answer 6

• weather

- expectations of future price changes

Question 7

composite demand

Answer 7

demand for a good that has multiple different uses

Question 8

joint demand

Answer 8

when an increase in demand for good x, causes consumers to demand more of good y.
e.g. dishwasher and dishwasher tablets

Question 9

competitive demand

Answer 9

when the demand for one good, reduced the demand for another.

Question 10

derived demand

Answer 10

when goods are demanded only because they are needed for the production of other goods.

Question 11

law of demand

Answer 11

inverse relationship between price and quantity demanded

Question 12

non-price factors

Answer 12

population
advertising
substitutes price
income
fashion and tastes
interest rates
complements price

Question 13

population

Answer 13

a greater population= more demand for goods and services.

a decrease in population= less demand

Question 14

advertising

Answer 14

good advertising will shift demand curve from d1 to d2, increasing demand from q1 to q2, regardless of price.

Question 15

substitutes price

Answer 15

a rival good, or a good that is in competition with something else.

Question 16

income

Answer 16

normal goods (luxury cars designer items)
- as income rises demand for these goods increases, when income decreases demand will also decrease   

inferior goods (fast food, public transport)- opposite relationship as income goes up demand for the products decreases, as income go down demand for them will increase

Question 17

fashion/tastes

Answer 17

if fashion changes toward a certain good/service its gonna make us demand more of it at the same price, shifting demand curve to the right from d1 to d2.

Question 18

interest rates

Answer 18

if interest rates go down it makes it cheaper to borrow which will increase demand for goods and services.

Question 19

complements price

Answer 19

price of a complement can shift a demand for another good either to the left or right.

Question 20

the relationship between price and quantity demanded using marginal utility theory

Answer 20

• marginal utility is the extra satisfaction derived from consuming one extra unit of the good.
• the demand curve is downward sloping because of diminishing marginal utility. the law of DMU suggests that consumer surplus generally declines with extra units consumed. this is because the extra unit generates less utility than the one already consumed. therefore, consumers are willing to pay less for extra units