2.2 demand Flashcards
what is demand
he quantity of a good or service that consumers are willing and able to buy at a given price in a given time period
what is derived demand
demand that comes about because of demand for another product
what is a normal good
a good where demand increases as income increases
what is the law of demand
for most goods and services the quantity demanded varies inversely (oppositely) to price
what is the relationship between price and demand
as price increases demand fall. as price decreases demand increases
what is a market demand
the total demand for goods and service. it can be found by adding the individual demand together
what causes a movement
a change in price
what are the consequences of a movement
increase in quantity demanded due to a fall in price - an expansion in demand
decrease in quantity due to an increase in price - a contraction in demand
what causes a shift in demand
income, population, advertising, season (anything non price)
what is elasticity of demand
a measure of responsiveness of quantity demanded to a change in the price of a product
what does inelastic demand mean
the price change will lead to a smaller change in demand
the PED value will be between 0 - 1
what does elastic demand mean
the price will lead to a larger change in demand
the PED value will be anything above 1
how do you calculated PED
%change in quantity demanded / %change in price
how does PED effect consumerism
governments could impose taxes on goods with inelastic demand
some customers have forced inelastic demand have to pay higher prices
how does PED effect producers
knowledge of PED can be used to impact revenue by changing price strategies
