Demand Flashcards
Defintion of Demand
willing and able to purchase and consume a product
Why does demand curve slope downwards
inverse relationship between price and quantity of a good or service
what does PED mean
change in price leads to a change in demand
PED eq
percentage change in demand // percentage change in price
% change eq
initial - final // final
Is PED positive or negative
negative
elastic PED and inelastic
> -1 elastic
<-1-0 inelastic
PED = -1
unitary elasticity of demand
Unitary elasticty of demand
demand changes by the same proportion as price
factors which inflence PED
necessity
addiction and habit
availability of substitutes
brand loyalty
proportion of income
time period
Factors which influence PED- NASBIT
Nessecity
Addiction
Substitutes
Brand Loyalty
Income
Time period
what happens when a non price factor changes
demand cure will shift
normal good
In economics, a normal good is a type of a good which experiences an increase in demand due to an increase in income,
inferior good
when income decreases demand increases
own brand products
relationship between goods
complements and substitues
conditions in demand
advertising
fashion and trends
population and class structure
season
income
price of other goods
income elasticity of demand
impact of a change in income on a change in demand
YED eq
change in QD /// change in income
YED for inferior goods
negative
YED for normal goods
positive
what is a luxury good (YED)
well its a good which is elastic
YED > 1
XED
cross price elasticity of demand
XED eq
change in QD demand good A // change in QD of price B
XDE = 0
no correlation between price of one good and demand for another
