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Question 1

What is demand

Answer 1

Indicates relationship between quantity wanted and price

Question 2

What is the income affect

Answer 2

If price of an item falls, you can buy more everything

Increased purchasing power means you’ll buy more of this item

Question 3

What is the substitution effect

Answer 3

Once price of a good falls, it appears relatively cheap compared to similar goods

This cheaper item is substituted in to replace other items

Question 4

What is a Giffen good

Answer 4

Inferior good but price rises crowd out other consumption

Question 5

What are Veblen goods

Answer 5

Luxury goods that’s more popular as price rises due to status associated with having this product. Price implies quality 

Question 6

What factors influence demand

Answer 6

Price
Product
Promotion
Place
Physical environment
People
Process

7ps

Question 7

What does price elasticities of demand depend on

Answer 7

Is there a USP

Availability of substitutes

Is it a compliment

Switching time costs

Income changes

Question 8

What is supply

Answer 8

Indicates relationship between quantity available and price