Demand (1.2.1) Flashcards
(15 cards)
What is demand?
Refers to the number of goods/services customers are willing to buy at a given price. Effective demand occurs when customers are willing and able to buy at a given price
What is the General Rule for Demand? (On Price and Quantity Demanded)
The higher the price the lower the quantity demanded. They have an inverse relationship
Is a demand curve seen with and upwards or downwards sloping line?
Downwards sloping
Factors leading to a change in Demand? (7 Factors)
-Price of Substitutes
-Change in Consumer Income
-Fashion, Tastes and Preferences
-Advertising and Branding
-Demographics
-External Shocks
-Seasonality
What happens to Demand on a graph if it increases?
Demand shifts to the right
What happens to Demand on a graph if it decreases?
Demand shifts to the left
What will a change in demand do to Quantity?
Change in Demand will impact the Quantity Demanded at a given price
What are Substitute Goods?
Alternative Products e.g. Coke+ Pepsi
What are Complimentary Goods?
Complementary goods are bundled together e.g. Phone +Airpods
What happens to a Demand Graph when Price of substitute increases?
Demand shifts to the right as if price of substitute increases demand for other product will increase.
What happens to a Demand Graph when Price of Compliment increases?
Demand shifts to the left as less demand for a product if people aren’t buying it in a bundle.
How can change in consumer incomes affect demand?
As consumer’s income rises= demand for normal goods increases
As consumer’s income falls= demand for inferior goods increase
How can advertising and branding affect demand?
If more money is spent on advertising and branding then this increases consumer awareness and brand loyalty
What does demographics refer to?
Demographics means facts about people like their age, gender, job, income, or where they live.
In business, companies use these facts to understand who their customers are and what they might want to buy.
How can demographics affect demand?
If structure or size of a country’s population changes then the demand for products will also change
