1.3.1 - 1.3.6

Question 1

Effective demand

Answer 1

The willingness and ability to buy a product

Question 2

Consumer sovereignty

Answer 2

The consumer is king

The consumer will buy what the consumer wants

Question 3

Tastes

Answer 3

The desires of the consumers

Question 4

Advertising and branding

Answer 4

The process of making the public aware of a particular brand

Question 5

Substitutes

Answer 5

Replacing a component for … Benefits
Financial
Efficient
Environmental

Question 6

Complementary goods

Answer 6

A product that gives an extra incentive to buy another product

Question 7

Income

Answer 7

Amount earned in one working year by an individual or business

Question 8

Population

Answer 8

General public

Question 9

Price

Answer 9

Amount of money that a business is selling a product for

Question 10

Demand schedule

Answer 10

Estimation of demand that a certain product gets

Question 11

Demand curve

Answer 11

Represented as a graph (Supply Vs Demand)
| \                           /
|   \                       /
|     \                   /--------------Supply
|       \               /
|         \           /
|           \       /
|             \   /
|               X----------------------Equilibrium
|             /   \
|           /       \-------------------Demand
|         /           \
|       /               \
|     /                   \
|   /                       \
| /                           \
L\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Question 12

Contraction of demand

Answer 12

When the price of the product rises,

The demand will be reduced because the market is more niche

Question 13

Extensions of demand

Answer 13

Demand for a good or service increases

Question 14

Shift in demand curve

Answer 14

Supply shifts to the left of the original curve

Unchanged = Equilibrium

Increased demand

Decreased demand

Question 15

Supply curve

Answer 15

The amount of supply that is needed to reach market equilibrium

Question 16

Short run

Answer 16

Short term solutions

Question 17

Long run

Answer 17

Long term solutions

Question 18

Excess supply

Answer 18

Too much of a product
(Price need to be reduced)
(Decreased production)

Question 19

Excess demand

Answer 19

Too many people want a product
(Increase cost)
(Increase supply)

Question 20

Market clearing

Answer 20

Equilibrium price where supply is the same or outweighed by demand

Question 21

Profit signalling mechanism

Answer 21

Potential profits directing entrepreneurs to gaps in the market

Question 22

Ceteris Parabis

Answer 22

The assumption that all variables stay the same other than the one being studied

Question 23

Price mechanism functions

Answer 23

An economic model that helps to explain the allocation of resources between different possible uses. It shows how the “invisible hand” guides resources towards production of what customers will buy

Question 24

Signalling

Answer 24

Prices give signals to the producers and consumers

Question 25

Rationing

Answer 25

Only those willing and able to pay the price get the products/resources

Question 26

Incentives

Answer 26

'Probability' motives firms | 'Value for money' motivates consumers

Question 27

Economic models

Answer 27

Used simplified assumptions to describe economic relationships. These allow us to isolate individual changes and analyse their consequences, avoiding the complications that occur when several things are changed at once.

Question 28

Allocation of resources

Answer 28

The way in which economic agents take decisions about what to buy, what to produce and how best to use the land available land/labour/capital

Question 29

Differentiated product

Answer 29

Products appear distinctive to increase sales and increase price in time

Question 30

Mass markets

Answer 30

Competitive markets

Question 31

Oligopoly

Answer 31

A few large, dominating firms and lots of other smaller firms within a market

Question 32

Market power

Answer 32

When a company differentiates a product so they can control price and amount produced

Question 33

Niche market

Answer 33

Small market segment with specific requirements

Question 34

Market research

Answer 34

Researching a market to determine the likelihood of success

Question 35

Primary market research

Answer 35

Fieldwork: | Researching the market yourself

Question 36

Secondary market research

Answer 36

Pre-existing research about other businesses

Question 37

Quantitative market research

Answer 37

Focussing on factual data within a market

Question 38

Qualitative market research

Answer 38

Focussing on opinions of consumers within a market

Question 39

Sampling

Answer 39

Asking people for their opinions using surveys and questionnaires

Question 40

Bias

Answer 40

Opinions that do not accurately represent the consumers as a whole

Question 41

Random sample

Answer 41

Researching randomly while specifically asking certain questions

Question 42

Quota sample

Answer 42

Results of a different individuals reflect population opinions as a whole

Question 43

Stratified samples

Answer 43

Similar to the quota sample but more accurate because it focuses results

Question 44

Market segmentation

Answer 44

Splitting a market up to determine who the more likely consumer will be

Question 45

Market positioning

Answer 45

Using the product and likely consumers to determine the segment of the market to aim for

Question 46

Repositioning

Answer 46

Where a product loses its attraction in the target market/wants to expand into a larger market segment

Question 47

Market map

Answer 47

Plotting key product features on a diagram

Question 48

Competitive advantage

Answer 48

Using the 'Market Map' and positioning to combine features of rival company products to find a gap in the market

Question 49

Product differentiation

Answer 49

Developing a unique product to entice consumers | Unique image/USP

Question 50

Competitive pricing

Answer 50

Researching other products to set a similar price to competitors to reach higher profit margins