Demand. Flashcards
What is demand
The quantity of a good or service that consumers are willing and able to buy given its price, the price of other goods, and consumers’ incomes and preferences.
What are the four things affecting demand?
- The price of the good
- The income of the consumer.
- The price of substitutes.
- The consumers preferences.
What is joint demand?
The demand for goods that are interdependent, so that they are usually demanded together.
What is composite demand?
The demand for a good that has multiple uses.
What is competitive demand?
The demand for goods that are competition with each other.
Give an example for joint demand.
Burger and ketchup sachet.
Any thing where the two goods and service would’ve been bought together.
Give an example for composite demand.
Water.
A good or service that can be utilised in multiple different ways.
Define ceteris paribus.
Meaning - “ all other things being equal “ -
Where a change in one variable will cause a new equilibrium.
What is the law of demand?
A law that states there is a inverse relationship between quantity demanded and the price of a good or service.
What is the demand curve?
A graph that shows how much a good will be demanded by consumers at any given price.
What is the real income effect?
Where a person who buys a good will end up with less income when the good is priced higher.
What is the substitution effect?
Where goods seem less attractive with a increase in price, therefore the good is more likely to be substituted.
What assumptions are made to simplify the demand curve?
It assumes substitutes will be priced with consistency, so that quantity demanded is linear with respect to price.
What do demand curves shift?
Because of a change in a non-price factor, shown through price not changing rather quantity demanded changing.
What causes a movement along the demand curve?
A change in price would cause a movement along the demand curve.
What is the snob effect?
The idea that the demand curve may become more sloped because people may be more willing to buy a good because the price is high.
What is a normal good?
A good where the quantity demanded increases in response to an increase in consumer incomes.
What is an inferior good?
A good where the quantity demanded decreases in response to an increase in consumer incomes.
What is a griffin good?
A good that when in composite demand with another good, a decrease in the price of one good will lead to a increase of demand in the other good.
What is a substitute good?
When two goods are said to be substitues if consumers regard them as alternatives, so that demand for one good is likely to rise if the price of the other good rises.
What are complimentary goods?
Where two goods are consumed jointly so that an increase in the price of one good causes demand for the other good to fall.
If demand for one complimentary good falls, what will happen to the demand for the other good?
It will also fall
If demand for one substitute good falls, what will happen to the demand for the other good?
The demand for the other good would rise.
Are people more or less likely to respond to a change in price as time passes?
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