1.2.1 Demand Flashcards
1
Q
What is demand?
A
The quantity customers are willing and able to buy at a given price in a time period
2
Q
What is the law of demand?
A
It has an inverse relationship with price
3
Q
What 7 examples cause changes in demand?
A
-Price
-Income
-Preferences in fashion
-Advertising and branding
-Demographic change
-External shocks
-Seasonal factors
4
Q
What is the income effect of a price change?
A
When income increases, demand increases as people are able to buy more in a budget
5
Q
What is the substitution effect of a price change?
A
Customers may choose a substitute if it is as good and cheaper
6
Q
What are complementary products?
A
Products that may be bought together
