1.2.1 Demand Flashcards
Factors affecting demand?
changes in the prices of substitutes and complementary goods changes in consumer incomes fashions, tastes and preferences advertising and branding (Strong brand) demographics external shocks (Pague, Famin) seasonality
What is demand?
Demand is the amount society is willing and able to buy at a set price at a given point in 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 you show the relationship between price and quantity demanded?
The relationship between price and quantity demanded can be shown using a demand curve
As price falls quantity demanded ____?
As price falls quantity demanded rises
As price rises quantity demanded ___?
As price rises quantity demanded falls
How do you show a change in demand caused by PRICE?
If a change in demand is caused by a change in price this is shown by a movement along the demand curve
What is a substitution Product?
A substitute product acts as an alternative, therefore creating competition
What is a Complementary Porduct?
A complementary product is bought alongside a good or service
In general, What happens as the income of consumers increases?
As the income of consumers increases demand for some goods and services will INCREASE
How is an increse in demand shown on a diagram?
An increase in demand is shown by a shift to the right
How is a decrease in demand shown on a diagram?
A decrease in demand is shown by a shift to the left
What 3 types of goods are there?
Necessities
Luxuries
Inferior goods
