demand and the demand curve

Question 1

what is demand

Answer 1

the quantity of goods/ services that a consumer is willing/able to buy at a given price in a given time period

Question 2

the law of demand and why

Answer 2

there is an inverse relationship between price and quantity demand
income effect: as income increases, increased PP, increased d for luxury goods, decreased d for inferior goods
substitute effect: as substitute prices increases, consumer demand increases

Question 3

movements along the demand curve

Answer 3

contraction: increase in price
extension: decrease in price

Question 4

non-price factors which affect demand

Answer 4

-Population: as population increases so will demand
-advertising: better advertising, increased demand
-substitute prices: if they increase, demand will increase
-income: income effect, luxury goods d rises with income and inferior goods d rises with lower income
-fashions/tastes
-interest rates: lower ir, lower cost of borrowing, increased d
-complementary goods: prices decrease, d will increase

these all shift the demand curve

Question 5

ceteris parabus

Answer 5

assuming all other factors remain constant