1.2.1 Demand Flashcards
what is demand?
the number of goods/ services customers are willing to buy at a given price
effective demand
occurs when customers are willing and able to buy at a given price
what kind of relationship is between the quantity demanded by customers and the price?
an inverse relationship
what will a change in any other factors affecting demand do?
it will shift the entire demand curve to the left or right
what does a change in price lead to?
a movement along the demand curve
give some non-price factors affecting demand
-changes in fashion and tastes
-advertising and branding
-changes to income
-changing demographics
-external shocks
-seasonality
what will a change in any non price factor lead to?
more demand which will shift the entire demand curve to the right (increase)
explain how changes in the price of substitutes works
goods are replaced
explain how changes in consumer incomes affects demand.
if income rises, demand for normal goods increases
if income falls, demand for inferior goods increases
explain how fashion, tastes and preferences affects demand
if goods and services become more fashionable then demand then increases
explain how advertising and branding affects demand
if more money is spent on advertising or branding then this increases consumer awareness and brand loyalty
explain how demographics affects demand
if the structure or size of a country’s population changes, then the demand for goods and services will change
explain how the seasonality affects demand
demand varies at different times of the year
explain how external shocks affects demand
an unexpected event can change the demand
describe some income effects that a change in price causes
-a fall in price increases purchasing power of customers
-this allows customers to buy more with a given budget
-for normal goods, demand rises with an increase in incomes
