1.2.1 demand Flashcards
1
Q
demand
A
quantity that customers are willing + able to buy at a given price in a given period of time
2
Q
causes of changes in demand (7)
A
- price
- incomes
- fashions/tastes/preferences
- advertising/branding
- demographic change
- external shocks
- seasonal factors
3
Q
basic law of demand
A
demand varies inversely with price
lower price makes products more affordable for consumers
4
Q
seasonal factors
A
there will be season peaks/troughs for most products
(eg increase in demand for baubles at Xmas time)
5
Q
income effect
A
- a fall in price, increases the purchasing power of consumers
- allows customers to buy more with a given budget
- demand increases with an increase of incomes
6
Q
substitution effect
A
- a decrease in the price of a good, makes it relatively cheaper than substitutes
- some customers will switch to good X –> higher demand
- depends if products are close substitutes
7
Q
inward shift (demand curve)
A
there is less bought at each price level
8
Q
outward shift (demand curve)
A
shows that there is more of the product being demanded at each price
