1.2.1 demand Flashcards
what is demand
demand for a good or service is the quantity that customers are willing and able to buy at a given price in a given period of time
what is a normal good
a normal good is one where,if price rises, demand will fall and vice versa i.e. there is a negative correlation
how can the relationship between price and quantity demanded be shown
in a demand curve
how can the relationship between price and quantity demanded be shown
in a demand curve
what is a demand curve
a demand curve is a graphical representation between price and quantity demanded
what does the demand curve show
it shows the quantity demanded for a good , at any given price, over a period of time.
what does an increase in price lead to
a decrease in demand
what else impacts demand other than price
- Population
- Advertising
- Substitutes
- Income(disposable
- Fashions and tastes
- Income tax
- Complements
ALSO competitor and government action and seasonal factors
what is a substitute
a substitute product acts as an alternative,therefore creating competition(e.g if proce of good A increases,the demand for good B will increase like cola and pepsi)(positive coralation)
what is a complementary product
a complementary product is bought alongside a good or service
-if the price of good A increases,the demand for good B will decrease.for example fish and chips or phone and charger
(there is a negative coralation)
how does income effect price changing
- a fall in price increases the purchasing power of customers
- allowing customers to buy more with a given budget
- for normal goods,demand rises with an increase in incomes
how does substitutes effect price changing
- a fall in the price of good x makes it relatively cheaper compared to substitutes
- some customers will switch to x leading to higher demand
- much depends on whether products are close substitutes
how does necessities changes in consumer income
it is less likely that demand for these will change in relation to income e.g would start buying more milk or less soap if your income changed?
how does luxuries changes in consumer income
if income increase customers may be able to afford more luxuries increasing demand,equally if income fall these may be the first items to cut e.g not booking a holiday
how does inferior goods effect the change in consumer income
if incomes increase demand may decrease as customers switch to being able to aford a better quality product e.g would you stop buying own brand brand tesco beans and start buying heinz
how does fashion, tastes and prefrences cause a change indemand
people’s tastes change over time and time and demand for fashionable products change regularly
what is advertising
advertising is a promotional method that involves the use of media to communicate with existing and potential consumers
(purpose is to generate awareness and desire)
what is branding
branding is a promotional method that involves the creation of an identity for a business for a business that distinguishes the firm and its products from competitors
what is a benefit of advertising and branding
if successful both advertising and branding will lead to an increase in demand
what is a disadvantage of advertising and branding
if brand reputation is damaged or advertising gives the wrong message demand can decrease
what is demographics
demographic factors are the statistical characteristics of the population,these include for example:
- age
- gender
- ethnic mix
what is demographics
demographic factors are the statistical characteristics of the population,these include for example:
- age
- gender
- ethnic mix
what is an example of demand changing in a demographic
migration has seen an increase in demand for a wide range of goods and services e.g housing,public transport and healthcare
what else does demographics influences
it also influences the type of products demand e.g changing taste of a more diverse nation and diffrent demands from an ageing population
what is an external shock
external shocks are unexpectedevents that are outside of the businesses control but have a direct impact on the level of demand
what is seasonal factors in demand
different products demand changes depending on the seasons for example the demand for ice cream spikes in summer but is at its lowest in winter
what factors shifts in the demand curve
- population
- advertising
- substitutes
- income (disposable)
- fashions and tastes
- income tax
- complements
which direnction does the demand curve shifts if demand increases
right
