Demand Flashcards
Name some factors effecting demand
Price
Competition
Brand loyalty
Income
Age
What is derived demand
The demand for a factor of production used to produce another good or service
What is composite demand
Exists where goods have more than one use - an increase in demand for one produce leads to a fall in supply of the other
What is the law of demand
There is an inverse relationship between the quantity demanded and the price of a good or service
How to calculate price elasticity of demand
Percentage change in quantity demanded divided by percentage change in price
What does being price elastic mean
Demand is highly responsive to a change in price
What factors effect a companies price elasticity
Brand loyalty
Competition
Number of close substitutes
Cost of substituting
degree of necessity
