1.2.1 : Market Demand

Question 1

What s the basic law of demand ?

Answer 1

Is that demand varies inversely with price - lower prices make products more affordable for consumers

Question 2

What s the basic law of demand ?

Answer 2

Is that demand varies inversely with price - lower prices make products more affordable for consumers

Question 3

What is the income effect ?

Answer 3

Fall in price increases the purchasing owner of customers
This allows customers to buy more with their given budget
For normal goods demend rises with an increase in incomes

Question 4

What is the substitution effect ?

Answer 4

A fall in price of goods makes it relatively cheaper compared to substitutes
Some customers will switch to goods eating to a higher demand
Much depends n whether products are close substitutes