Demand Flashcards
What is demand
Demand is the quantity of goods and services that a consumer is willing to and able to buy at a given price at a given time.
What does a demand diagram look like
negative relationship between price and quantity demanded
What is the movement from a to b called down the line and a to c up the line
A to B is called an extension in demand
A to C is called a contraction in demand
When does a contraction and a extension happen
An extension happens when there is a decrease in Price whilst a contract happens when there is an increase in price
What are the factors that cause a shift in demand
The factors are (PASIFIC)
P- Population
A- Advertising
S- Subsidies
I- Income(disposable)
F- Fashion and Taste
I- Income tax
C- complements
How does Population affect demand
If there is an increase in population demand while shift to the right
How does Advertising affect demand
Successful advertising will lead to an increase in demand (shift right) whilst negative advertising will lead to a to a decrease in demand (shift left)
How does disposable income affect demand
An increase in disposable income will lead to ore spending therefore demand will shift right
How does substitutes affect demand
Close substitues will lead to an increase in demand for the good with the lowest price
How does Fashion and taste affect demand
More fashionable = shift right
How does income tax affect demand
A rise in income tax will lead to a decrease in disposable income therefore leading to demand to shift left.
What is Individual Demand
individual demand is the demand of one individual or firm
What is Market Demand
Market demand provides total quantity demanded by all consumers. Representing the aggregate of all demand
What is joint demand
Goods that demanded together (complements)
What is composite demand
Demand that has multiple uses
What is competitive Demand
Markets where a number of of substitutes exist
