1.2.1 demand Flashcards
(16 cards)
what is demand
the amount of of a good/service that consumers are willing and able to buy at a given price at a specific time
which way does the demand curve slope
downwards.
shows that as the price of a product increases, the demand decreases.
what does equilibrium mean
its the market clearing price
when does a surplus occur
when the price increases
the quantity demanded would be less than the quantity supplied, so there would be an excess supply and therefore a surplus im the market.
when does a shortage occur
when the price decreases
there is more demand than supply, and so there would be excess demand and therefore a shortage in the market
what causes a movernment in the demand curve
a change in price
(no lines are moving)
what causes a shift in the demand curve
any other factors except from a change in price
factors which shift demand
- substitutes
- complementary products
- consumer income
- fashion, consumer tastes and preferences
- advertising and branding
- demographics
- seasonal changes
- external shocks
explain how substitutes will affect demand
substitutes are products that cab be used to replace another- customers see them as very similar products.
the demand of a particular brand or product type can be affected by a price change of a substitute.
for example, if the cost of margarine increases by a huge amount, then the demand of butter would rise
explain how complementary products will affect demand
there are products which are used together.
e.g printers and ink cartridges. so the price of printers were to increase , the demand for printers might fall, so the demand for ink cartridges could fall too.
explain how consumer incomes will affect demand
a higher income can lead to an increase in demand for more expensive products (luxury goods)
whereas a fall in income can lead to an increase in demand for cheaper goods (inferior)
YED- he responsiveness of quantity demanded to a change in income.
explain how fashion, consumer tastes and consumer preferences can affect demand
demand for a product relies on what consumers want. businesses have got to constantly innovate and adapt to changes whilst in a dynamic market.
for example, warnings about the dangers of eating too much sugar could lead to a change in consumer diets- this could lead to a fall in demand for sugary drinks and an increase in demand for healthier drinks.
explain how advertising and branding can affect demand
this aims to increase demand for a product, or encouraging existing consumers to be loyal to the product brand and repeatedly buy the product, even when faced with a good substitute, to stop demand falling
however this is expensive
explain how demographics can affect demand
demographics looks at the number of people with different characteristics in a population, such as the number of people in
changes in population can lead to changes in demand.
for example, advances in healthcare mean thar, on average, people are living longer. This has led to an increase in demand of goods and services for the older generation
explain how seasonal changes can affect demand
demand for goods and services can change throughout the year.
for example,a long, cold winter often leads to an increase in demand for gas used in central heating,
a hot summer is likely to lead to an increase in demand of fans and air conditioning units
explain how external shocks can affect demand
this includes recession, boom, inflation, interest rates, exchange rate, war, disease, extreme weather.
for example a risk of flooding may lead to an increase in demand for sandbags as people try to protect their homes
or in covid and lock down there was an increase in demand for toilet paper
