DEMAND AND DEMAND CURVE

Question 1

DEMAND IS

Answer 1

Quantity of g/s consumers are willing and able to buy

at a given price

in a give time period

Question 2

what does demand have to be for it to exist

Answer 2

effecitve

Question 3

demand being effective means

Answer 3

people willing and bale to buy

Question 4

law of demand has what kind of relationship

Answer 4

inverse relationship between QD and Price

Question 5

as price increases in demand waht happens to QD

Answer 5

decreases

and vice versa

Question 6

on x axis when drawing deamnd curve what is there

Answer 6

price

Question 7

on y axis when drawing demand curve waht is there

Answer 7

quantity deamdned

Question 8

show law of demand on graph

Answer 8

axis labelled x - qd y - price

price increase p1 - p2 demand goes from q1 to q2
Price decreases p1 - p3 increase in qd from q1 to q 3

Question 9

when we increase price what happens to demand curve
3 marks

Answer 9

we move up demand curve

get contraction in demand

see reduction in QD

Question 10

ceteris paribus mean

Answer 10

all other factors remaining equal

Question 11

ceteris paribus allows us to

Answer 11

isolate impact of price changes and see impact it has on qd

Question 12

When we decrease price waht happens to demand curve 3 marks

Answer 12

move down deamnd curve

• extension/expansion of demand

increase in QD

Question 13

when price changes theres ..

2 marks

Answer 13

change in QD by movement along demand curve

Question 14

what 2 effects can we use to explain downward sloping nature of demand

Answer 14

INCOME EFFECT

SUBSTUTION EFFECT

Question 15

Explain income effect when price increases

5 matks

Answer 15

If prices go up

our income cant stretch as far , as purchasing power decreases ,

we are less able to buy ,

i.e Y dont allow us to buy same Q of g/s as before

so demand contracts

vise versa

Question 16

explain substitution effect when price increases

5 marks

Answer 16

Price of g/s increases

we demand less

As price go up other g/s become more price competitive

so we switch demand and consumption towards buying those g/s instead

hence why demand contracts for specific good /s

vice versa

Question 17

substituiotn and income effect assume

Answer 17

ceteris paribus

Question 18

when we drop ceersi paribus we allow

Answer 18

non price factors to affect and shift demand

Question 19

Increase d - shifts d

Answer 19

right

Question 20

decreased d shift d

Answer 20

left

Question 21

as non price factors shift D regardless of price when using grah we

Answer 21

shift at same price

Question 22

draw demadn curve shifting becuase of price

5 marks

Answer 22

axis labelled y- price x - QD

shifts of price up and down

shift of QD left and right

contraction upward

expansion downward

Question 23

acronmy to rember non price shifters of demand

Answer 23

PASIFIC

Question 24

P stands for

Answer 24

Population

Question 25

A stands for

Answer 25

Advertising

Question 26

S stands for

Answer 26

substitute prices

Question 27

i 1stands for

Answer 27

income

Question 28

F stands for

Answer 28

fashion / trends

Question 29

I 2stands for

Answer 29

interest rates

Question 30

C stands for

Answer 30

complements

Question 31

increase in population affects on demand ? + draw

Answer 31

more demand for certain g/s shift form D1 - D2 , QD increase from Q1 to Q2

Question 32

Advertising affcets

Answer 32

willingness to buy somehting

Question 33

good adv affect on demand , bad adv such as bad pr new article

Answer 33

shift right from d1 - d2 increasing demand q1 - q2

Question 34

bad adv such as bad news article effect on demand 3 marks

Answer 34

demand curve shift left we become less willing to buy qd drops d1 -d3

Question 35

how do substitutes affect demand e.g price of pepsi go up 3 marks

Answer 35

more people willing and more able to buy coke shifting demand curve from d1 - d2 and qd right (increases) vise versa

Question 36

when looking at income what should we distinct between

Answer 36

normal and inferior goods

Question 37

when income rises what happens to normla good

Answer 37

increase in demand

Question 38

income rise what happens to demand for normal goods 3 marks + graph wise

Answer 38

demand shifts right qd increases more people willing and able ot buy something like fine dining

Question 39

with inferior goods waht ahpoens when incomes increase

Answer 39

demand for them decreases

Question 40

whats a beautiful word to describe inferior goods

Answer 40

counter cyclical

Question 41

example of inferior good

Answer 41

fast food / public transport

Question 42

what happens to demand for fast food when income rise 3 marks

Answer 42

demand shifts left qd decreases as more able to buy normal and luxury goods and services

Question 43

fashion affects our waht to buy

Answer 43

willingness

Question 44

lets say trend towards pop its increases what happens to demand

Answer 44

shift right qd increases as we demand more of that good AT THE SAME PRICE

Question 45

in ternms of IR what type of goods do consumers borrow money for

Answer 45

holidays houses cars

Question 46

explain what happens to g/s when IR go down 2 marks

Answer 46

cheaper for consumers ot borrow increasing demand for g/s- D shift right + qd increases AND VISE VERSA

Question 47

for complemetary good e.g printer if price of printers go up what happens to demand for printer ink and vice versa

Answer 47

DEMAND FOR PRINTER INK DECREASES DEMAND CURVE SHIFTS LEFT but if price of printer go down demand for printer ink would increase shifting d1 - d2

Question 48

What is important about complementary goods lets say if price of printer goes up and d for ink goes down - hint price

Answer 48

its not price of printer ink that changes but the price of printers that has changed causing demand curve for ink to shift left