demand Flashcards
(31 cards)
Explain the relevance of ceteris paribus is broken to a shift in the demand curve.
It is only when ceteris paribus us broken that the demand curve shifts.
Identify reasons for a decrease in demand
decrease in -disposible income -price of a substitute increase in -direct tax -price of a complement. PRODUCT IS OUT OF FASHION
Why do individuals buy more at a lower price
they can afford more/ willing and able to buy more.
impact on percentages of household income saved and consumed when income rises.
savings % increases/ consumption% decreases. More income means more saving possible.
what is meant by fair-trading.
Doing what is right and just when dealing with others / Not cheating or deceiving others.
What is meant by the term values
core beliefs or key principles or those things we consider most important, for example honestly, consideration of others, fair trading, integrity
factors that determine values that individuals may hold
Age, gender, upbringing, religion culture, gender, peer pressure.
Household income after govt. taxes and transfer payments is termed.
disposable income.
define the term household.
an economic unit of consumption.
what is the link between income and spending.
As income rises so will consumption. The level of consumption is lower than the level of income because income tax is deducted or some income is saved not spent.
Define aggregate household spending.
the total spending of all house holds in an economy.
What is the relationship between limited means and the need to make decisions?
Individuals have limited means (income, time and skill) so can not afford to buy everything they want or have sufficient time to do everything, so they must make choices.
Explain how the concept of choice, opportunity cost and scarcity are linked
Scarcity means individuals have limited means( income and time so choices need to be made between alternatives. Every choice results in an opportunity cost which is the next best alternative forgone.
describe how an individuals family might help meet their needs.
providing food, providing a service, giving a loan or trust fund
describe the law of demand
A fall in the price of a good or service will lead to an increase in quantity demanded ceteris paribus
Explain the concept of luxuries
luxuries are goods and services that make life more comfortable and enjoyable but households could manage without them
Describe the economic relationship between a desktop computer and a laptop computer.
Desktop computers and laptop computers are substitutes, they can be used in place of each other. As the price of a desktop computer increases the quantity demanded for these will fall. The demand for laptop computers will increase because they are now relatively cheaper
Explain the difference between a change in quantity demanded and a change in demand
A change in the quantity demanded results from a change in the price of a product. There is a movement along the existing demand curve. A change in demand is when the entire demand curve shifts to a new position and is caused by a change in disposable income , taste or change in the price of a substitute or compliment.
why might an increase in disposable income result in a fall in demand for some products?
As income increases an individual may switch and buy better quality products the demand for the inferior product will therefore fall.
Explain the concepts of necessities
Necessities are goods and services households must have in order to sustain life for examples food, water, shelter
explain the relationship between income level and type of goods and services purchased.
At lower levels of income a high proportion of income is spent on necessities. At higher levels of income a greater proportion is spent on luxuries.
Explain the term inferior goods
Inferior goods are cheaper or lower quality goods and services that we are likely to buy less of as our income increases. eg cheap cuts of meats
Explain the concept of choices.
idea of a decision between alternatives e.g.. going out to a movie, renting a dvd.
Explain the effect of a decrease in direct income tax on demand.
if the direct income tax rates decrease, individuals disposable income would increase. this means they can afford to buy more and more will be demanded at each and every price.
