1.2.2 - Demand

Question 1

What Is Demand?

Answer 1

Amount of a good / service that a consumer is willing and able to purchase at a given price in a given time period.

Question 2

What Is Meant By Not Effective Demand?

Answer 2

If a consumer is willing to purchase a good but cannot afford to.

Question 3

What Do Movements Along The Demand Curve Look Like?

Answer 3

Question 4

What Causes Movements Along The Demand Curve?

Answer 4

Change in price.

Question 5

What Happens When Demand Contracts?

Answer 5

QD falls due to an increase in price.

Question 6

What Happens When Demand Extends?

Answer 6

QD rises due to a decrease in price.

Question 7

What Is The Law Of Demand?

Answer 7

States that there is an inverse relationship between price and QD.

Question 8

What Do Movements In The Demand Curve Look Like?

Answer 8

Question 9

What Does A Shift Inward Mean?

Answer 9

Fewer goods are demanded at each and every price.

Question 10

What Does A Shift Outward Mean?

Answer 10

More goods are demanded at each and every price.

Question 11

What Is The Mnemonic Used For Factors Shifting The Demand Curve?

Answer 11

PASIFIC

Question 12

What Are The Conditions Of Demand?
(7 Points)

Answer 12

P - Population.

A - Advertising.

S - Substitute price.

I - Income.

F - Fashion / Tastes.

I - Interest rates.

C - Complement price

Question 13

What Is Total Utility?

Answer 13

The satisfaction gained by a customer as a result of their overall consumption of a good.

Question 14

What Is Marginal Utility?

Answer 14

The change in satisfaction resulting from the consumption of the next unit of a good.

Question 15

What Does The Law Of Diminishing Marginal Utility State?

Answer 15

The satisfaction derived from the consumption of an additional unit of a good will decrease as more of a good is consumed.

Question 16

How Does The Law Of Diminishing Marginal Utility Explain The Downward-Sloping Demand Curve?
(2 Points)

Answer 16

~ When the first unit is purchased utility is high, consumers are willing to pay a higher price.

~ When following units are purchased, each one offers less utility, so consumer are less willing to pay the initial price.

Question 17

Why Does Lowering The Price Encourage Consumers To Keep Consuming Additional Units?

Answer 17

Makes it more attractive for the consumer as each subsequent unit offers less utility.

Question 18

What Is Meant By Utility?

Answer 18

Satisfaction.