key vocab demand

Question 1

What is excess demand?

Answer 1

The amount by which the quantity demanded exceeds the quantity supplied at the current price.

Question 2

What is excess supply?

Answer 2

The amount by which the quantity supplied exceeds the quantity demanded at the current price.

Question 3

What is joint demand?

Answer 3

When two or more products are demanded together, such as printer cartridges.

Question 4

What is competitive demand?

Answer 4

When the demand for one product increases, the demand for another product decreases, such as substitute goods like butter and margarine.

Question 5

What is composite demand?

Answer 5

When a product has more than one use, so an increase in the demand for one use leads to a fall in the supply available for another use.

For example, milk is used to produce cream and cheese.

Question 6

What is derived demand?

Answer 6

When the demand for a product or factor of production is determined by the demand for a different product.

For example, the demand for steel is derived from the demand for cars.

Question 7

What is joint supply?

Answer 7

When the output of one product also results in the output of a different product.

For example, sheep farming can lead to the supply of both meat and wool.

Question 8

What is production?

Answer 8

The process of using factors of production to create goods and services.