1.1.3 Demand, supply and market equilibrium

Question 1

What is demand

Answer 1

Demand is the amount of a good that consumers are able or willing to buy at a given price

Question 2

What affects demand

Answer 2

Population
Advertising
Substitute
Income
Fashion Trends
Interest rates
Complimentary goods
External shocks

Question 3

What are examples of external shocks

Answer 3

Outbreak of war
Changes in unemployment
Interest rate
Inflation

Question 4

What is interest rate

Answer 4

The cost of borrowing+ the reward for saving

Question 5

What is supply

Answer 5

The amount of a product which suppliers will offer to a market at a given price

Question 6

What are the factors that may cause a shift in the supply curve

Answer 6

Changes in production
Changes in Technology
Indirect VAT
Subsidies (Government Money)
Natural Factors (External shocks, weather etc

Question 7

What are the factors that affect demand curve

Answer 7

Advertising
Income
Fashion Trends
Price of substitute goods
Price of complimentary goods
Demographic changes

Question 8

Complimentary Good
(Joint Demand)

Answer 8

Demand for one type of good will affect another type good

Question 9

Substitute Goods
(Alternative Demands)

Answer 9

The impact of a change in price will cause consumers to switch products to an alternative good.

Question 10

What is Market Equilibrium

Answer 10

Where demand meets supply this is called the equilibrium price