1.2.2 - Demand

Question 1

What Is Demand?
(2 Points)

Answer 1

~ Quantity of a good or service that consumers are willing and able to buy at a given price in a given time period.

~ Has to be effective demand, where consumers are both willing and able to purchase something.

Question 2

What Does The Law Of Demand State?
(2 Points)

Answer 2

~ There is an inverse relationship between price and quantity demanded.

~ As price increase, QD decreases. Vice versa.

Question 3

What Do Movements Along The Demand Curve Look Like?
(3 Points)

Answer 3

~ Caused by changes in price assuming ceteris paribus.

~ Contraction -> As quantity is falling.

~ Extension -> As quantity is rising.

Question 4

Why Is The Demand Curve Downward Sloping?
(2 Points)

Answer 4

~ Income effect.

~ Substitution effect.

Question 5

What Factors Cause Shifts In The Demand Curve?
(2 Points)

Answer 5

~ Non-price factors.

~ P A S I F I C -> (Conditions of demand).

Question 6

What Does P A S I F I C Stand For?
(8 Points)

Answer 6

1) Population.

2) Advertising.

3) Substitutes price.

4) Income.

5) Fashion / Tastes.

6) Interest rates.

7) Complements price.

Question 7

What Do Shifts In The Demand Curve Look Like?

Answer 7