1.2.1 Demand Flashcards
demand definition
the quantity of a product bought at a given price over a given period of time
demand curve definition
the line drawn on a graph that shows how much of a good will be bought at different prices
the demand graph
- price is shown on the Y axis
- quantity demanded is shown on the X axis
- the line drawn is called the demand curve and each point on the demand curve represents the amount of goods or services a customer is willing to buy at a price
factors leading to a change in demand
- changes in the prices of substitutes and complimentary goods
- changes in consumer income
- fashions, tastes and preferences
- advertising and branding
- demographics
- external shocks
- seasonality
illustration of an increase and decrease in demand
price I \ \ \ inc I \ \ \ I \ \ I \ \ \ I \ \ \ I dec \ \ \ I\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ quantity demanded
substitute goods definition
goods that can be bought as an alternative to others, but perform the same function
complimentary goods definition
goods that are purchased together because they are consumed together
inferior goods definition
goods for which demand will fall if income rises or demand will rise in income falls
-e.g own brands (supermarket branded products), public transport, ready meals
normal goods definition
goods for which demand will rise if income rises or demand will fall if income falls
-e.g. toilet roll, tooth paste, milk
luxury goods definition
goods for which demand will rise rapidly if income rises or demand will fall rapidly if income falls
-e.g. clothes and shoes, going to the cinema
what happens to the demand curve when their is a change in price
it causes a movement ALONG the demand curve
