demand & supply

Question 1

demand

Answer 1

what consumers are willing and able to pay for a good/ service at a given price

Question 2

derived demand

Answer 2

a good that is demanded in order to use another (demand is linked)

Question 3

composite demand

Answer 3

a good that is demanded for two or more uses

Question 4

joint demand

Answer 4

the demand for one product or service generates demand for another related product or service

Question 5

True or False: Demand increases when the price of a good decreases.

Answer 5

True

Question 6

What is the law of demand?

Answer 6

The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases, and vice versa.

Question 7

Determinants that can cause a shift in the demand curve?

Answer 7

APINT
- Advertising
- Price of substitute
- Income
- Number of people
- Taste

Question 8

What is the difference between a change in quantity demanded and a change in demand?

Answer 8

A change in quantity demanded is a movement along the demand curve due to a price change.

A change in demand involves a shift of the entire demand curve due to other factors.

Question 9

If the price of a substitute good increases, what happens to the demand for the original good?

Answer 9

The demand for the original good increases; because it is the cheaper option

Question 10

What is elastic demand?

Answer 10

Elastic demand occurs when the quantity demanded changes significantly as a result of a price change.

Question 11

True or False: If demand is inelastic, a price increase will lead to a decrease in total revenue.

Answer 11

False

Question 12

What does a perfectly inelastic demand curve look like?

Answer 12

A perfectly inelastic demand curve is a vertical line, indicating that quantity demanded does not change with price.

Question 13

What does it mean if the price elasticity of demand is greater than 1?

Answer 13

It means that demand is elastic, and quantity demanded changes more than the price change.

Question 14

Fill in the blank: Goods that are necessities tend to have ________ demand.

Answer 14

inelastic

Question 15

What is the relationship between demand and consumer income for normal goods?

Answer 15

For normal goods, demand increases as consumer income increases.

Question 16

For inferior goods, what happens to demand when consumer income rises?

Answer 16

Demand for inferior goods decreases as consumer income rises.

Question 17

What is a demand schedule?

Answer 17

A demand schedule is a table that shows the quantity of a good that consumers are willing to purchase at different prices.

Question 18

What is a demand curve?

Answer 18

A demand curve is a graphical representation of the demand schedule, showing the relationship between price and quantity demanded.

Question 19

True or False: A rightward shift in the demand curve indicates an increase in demand.

Answer 19

True

Question 20

What effect does consumer expectation of future price increases have on current demand?

Answer 20

It typically increases current demand as consumers buy more now to avoid higher prices later.

Question 21

What is the difference between complementary goods and substitute goods?

Answer 21

Complementary goods are used together, while substitute goods can replace each other.

Question 22

True or False: The demand for luxury goods is generally more elastic than for basic necessities.

Answer 22

True

Question 23

What is market demand?

Answer 23

Market demand is the total demand for a good or service from all consumers in the market.

Question 24

What does a leftward shift in the demand curve indicate?

Answer 24

A leftward shift indicates a decrease in demand.

Question 25

Fill in the blank: The ________ effect explains how consumers react to changes in the price of a good.

Answer 25

substitution

Question 26

substitute

Answer 26

goods in competitive demand

Question 27

compliments

Answer 27

a good that is demanded alongside another good

Question 28

inferior good

Answer 28

when your income rises demand for this good falls eg. tesco own brand

Question 29

normal good

Answer 29

when your income rises demand for this good increases eg. Heinz

Question 30

free good

Answer 30

has no opportunity cost

Question 31

economic good

Answer 31

has an opportunity cost

Question 32

what happens to demand curve after price falls

Answer 32

moves down the curve

Question 33

Consumer surplus

Answer 33

the additional benefit or utility that consumers receive when they are able to purchase a good or service at a price lower than what they are willing to pay It represents the difference between what consumers are willing to pay (their maximum price) and what they actually pay in the market

Question 34

ceteris paribus

Answer 34

everything else remains constant

Question 35

producer surplus

Answer 35

the additional profit that producers earn when they sell a good or service at a price higher than their minimum acceptable price It represents the difference between the market price and the producer's marginal cost of production

Question 36

supply

Answer 36

what producers are willing and able to supply at for a given price and time

Question 37

how does a change in price of a good or service effect supply

Answer 37

causes movement along the curve

Question 38

determinants of supply

Answer 38

Productivity Indirect tax No. of suppliers Technology Weather Subsidies Cost of production

Question 39

joint supply

Answer 39

where an increase in supply increases supply of another good