Theme 1.2.1: Demand Flashcards
Buyers
People or organisations that want to purchase something thus they create the demand for goods and services
Sellers
People or organisations that want to sell something thus they create the supply for a product or service
Demand
The amount of a product that customers will want and be able to buy at a range of different prices. High price means demand is low, low price means demand is high
Market Demand
Total of all individual demands for a product
What happens when price rises?
Demand falls
What happens when price falls?
Demand rises
Demand Curve
A representation of the relation between quantity demand and price for a product or service. Despite the name, it is usually represented as a straight line
Cause of a Shift in the Demand Curve
. Quantity Demanded is less causing a shift down
. Quantity Demanded is higher causing a shift up
. Price is lower causing higher Quantity Demanded
. Price is higher causing lower Quantity Demanded
How does the change in price of a Substitute Good effect Demand?
. If the price for the substitute product increases, demand for the original product increases
. If the price for the substitute product decreases, demand for the original product decreases
How does the change in price of a complementary good effect Demand?
. If the price of the complementary product decreases, demand for the original product increases.
. If the price of the complementary product increases, demand for the original product decreases
How does a change in consumer incomes effect Demand?
. If consumer incomes rise, demand for most goods and services rises. Substitute goods however may decrease
. If consume income decreases, demand for most goods and services decreases. Substitute goods however may increase
How does a change in fashion tastes and preferences effect Demand?
. If the preference for one thing increases, demand will.
. If the preference for one thing decreases, demand will.
How does advertising and branding effect Demand?
. Advertising can increase demand by making consumers want to buy more of something
. Branding and a strong brand increases the levels of demand also
How does Demographics effect Demand?
As population increases or decreases demand for most products and services follows suit. The make up of this also effects demand e.g if there are lots of new born babies demand for nurseries increases.
How does external shocks effect Demand?
In most cases this decreases demand for example in extreme cases terror attacks have made people less willing to fly however on the flip side of this a report claiming chocolate to be healthy would increase the demand massively
