1.2.1 demand

Question 1

what is demand

Answer 1

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

Question 2

what is a normal good

Answer 2

a normal good is one where,if price rises, demand will fall and vice versa i.e. there is a negative correlation

Question 3

how can the relationship between price and quantity demanded be shown

Answer 3

in a demand curve

Question 4

how can the relationship between price and quantity demanded be shown

Answer 4

in a demand curve

Question 5

what is a demand curve

Answer 5

a demand curve is a graphical representation between price and quantity demanded

Question 6

what does the demand curve show

Answer 6

it shows the quantity demanded for a good , at any given price, over a period of time.

Question 7

what does an increase in price lead to

Answer 7

a decrease in demand

Question 8

what else impacts demand other than price

Answer 8

• Population
• Advertising
• Substitutes
• Income(disposable
• Fashions and tastes
• Income tax
• Complements

ALSO competitor and government action and seasonal factors

Question 9

what is a substitute

Answer 9

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)

Question 10

what is a complementary product

Answer 10

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)

Question 11

how does income effect price changing

Answer 11

• 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

Question 12

how does substitutes effect price changing

Answer 12

• 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

Question 13

how does necessities changes in consumer income

Answer 13

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?

Question 14

how does luxuries changes in consumer income

Answer 14

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

Question 15

how does inferior goods effect the change in consumer income

Answer 15

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

Question 16

how does fashion, tastes and prefrences cause a change indemand

Answer 16

people’s tastes change over time and time and demand for fashionable products change regularly

Question 17

what is advertising

Answer 17

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)

Question 18

what is branding

Answer 18

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

Question 19

what is a benefit of advertising and branding

Answer 19

if successful both advertising and branding will lead to an increase in demand

Question 20

what is a disadvantage of advertising and branding

Answer 20

if brand reputation is damaged or advertising gives the wrong message demand can decrease

Question 21

what is demographics

Answer 21

demographic factors are the statistical characteristics of the population,these include for example:

• age
• gender
• ethnic mix

Question 22

what is demographics

Answer 22

demographic factors are the statistical characteristics of the population,these include for example:

• age
• gender
• ethnic mix

Question 23

what is an example of demand changing in a demographic

Answer 23

migration has seen an increase in demand for a wide range of goods and services e.g housing,public transport and healthcare

Question 24

what else does demographics influences

Answer 24

it also influences the type of products demand e.g changing taste of a more diverse nation and diffrent demands from an ageing population

Question 25

what is an external shock

Answer 25

external shocks are unexpectedevents that are outside of the businesses control but have a direct impact on the level of demand

Question 26

what is seasonal factors in demand

Answer 26

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

Question 27

what factors shifts in the demand curve

Answer 27

• population
• advertising
• substitutes
• income (disposable)
• fashions and tastes
• income tax
• complements

Question 28

which direnction does the demand curve shifts if demand increases

Answer 28

right