1.3 Nature Of Demand Flashcards
(42 cards)
Define demand
quantity of A good or service consumers are WILLING AND ABLE to buy
- at any possible price
- in a given period
What is the difference between individual and market demand?
Individual refers to an individual consumer (demand def. ) whereas market relates to ALL consumers in a market. (the demand def. refers to market demand)
Define derived demand
Demand for a FOP or a good which DOESNT DERIVE from the factor or the good itself but from the goods it produces.
E.g. steel, machinery/ labour
Define joint demand
Demand for goods which are INTERdependant so they are demanded together
E.g. fish and chips
strawberries and cream
printer and print cartridges
Composite demand
Demand for a good that has multiple uses e.g. water
Competitive demand
Demand for goods that are in COMPETITION with each other
e.g. beef vs pork
What does the Latin phrase ‘ceteris parabis’ mean?
Means “other things being equal”. Used to focus on changes in one variable while holding other influences constant.
How is the demand for DVDs influenced by price?
Assuming ceteris paribus you would expect demand to be high when price is low and vice versa. (AKA law of demand)
Define the law of demand
States there is an inverse relationship between quantity demanded and price of a good service, ceteris paribus
What is a demand curve?
Graph showing how much of a good is demanded at any given price.
What is the relationship of the demand curve?
Inverse relationship. Demand curve slopes downward.
Why is the demand curve downward sloping?
- Real income effect - as price increases less income is left over
- Substitution effect - finding other goods more attractive that are cheaper
What causes a MOVEMENT along the demand curve?
Consumers responding to price change
Could a demand curve ever slope upward?
Yes, arguably due to “snob effects”. Some people may value certain goods more because their price is high eg Rolex watches
(Conspicuous consumption effect
Gary V- people gain value from having other people notice they are rich enough to afford to consume a particular food)
Doesn’t work for whole markets/ No evidence for it.
What causes a shift in the demand curve?
- Consumer incomes
Define a normal good
Increased income means demand for the good increases
Define an inferior good
When consumer incomes increase demand decreases
Define demand
quantity of A good or service consumers are WILLING AND ABLE to buy
- at any possible price
- in a given period
What is the difference between individual and market demand?
Individual refers to an individual consumer (demand def. ) whereas market relates to ALL consumers in a market. (the demand def. refers to market demand)
Define derived demand
Demand for a FOP or a good which DOESNT DERIVE from the factor or the good itself but from the goods it produces.
E.g. steel, machinery/ labour
Define joint demand
Demand for goods which are INTERdependant so they are demanded together
E.g. fish and chips
strawberries and cream
printer and print cartridges
Composite demand
Demand for a good that has multiple uses e.g. water
Competitive demand
Demand for goods that are in COMPETITION with each other
e.g. beef vs pork
What does the Latin phrase ‘ceteris parabis’ mean?
Means “other things being equal”. Used to focus on changes in one variable while holding other influences constant.
