Chapter 4, part 1

Question 1

Demand

Answer 1

number of units of goods a consumer wants to buy at various prices

Question 2

The law of demand…

Answer 2

states that an increase in price leads to a decrease in quantity demanded or a decrease in price leads to an increase in quantity demanded.

Question 3

Demand curve

Answer 3

is a graph illustrating demand for a good at various prices at any given time

Question 4

Types of demand

Answer 4

individual demand and market demand

Question 5

Individual demand…

Answer 5

studies the quantities of a good that an individual consumer is prepared to buy at each price.

Question 6

Market demand

Answer 6

Aggregate demand shows the different quantities demanded for a good at various market prices at any given time.

Question 7

How to derive market demand

Answer 7

To derive market demand we add the quantity demanded by each consumer at each price to calculate the overall demanded by the market

Question 8

Derived demand

Answer 8

Demand for a good, not for its own sake but for its use in the production of other goods. e.g land is not demanded for the land itself, but the house that can be built on the land.

Question 9

Composite demand

Answer 9

Applies where goods have more than one use. An increase in demand for one product can result in a fall in supply of another product.

Question 10

Effective demand…

Answer 10

refers to the willingness and the ability of consumers to purchase goods/services at different prices.