2. Demand In A Market.

Question 1

Effective demand.

Answer 1

Demand backed up by the ability to pay for a good or service.

Question 2

Market demand.

Answer 2

Total demand in a market for a good or service, the sum of all individuals demand, at each given price level.

Question 3

Contractions in demand.

Answer 3

Falls in QD caused by rises in prices.

Question 4

Extensions in demand.

Answer 4

Increases in demand caused by falls in price.

Question 5

Normal goods. (What’s the income elasticity of demand?)

Answer 5

Goods or services which see an increase in demand when incomes rise. Positive income elasticity of demand.

Question 6

Inferior goods. (What’s the income elasticity of demand?)

Answer 6

Goods or services which see a fall in demand when incomes rise. Negative income elasticity of demand.

Question 7

Complimentary goods. (What’s the cross price elasticity?)

Answer 7

Goods that are consumed together. (Bread and butter) Negative cross price elasticity.

Question 8

Composite demand.

Answer 8

When a good is demanded for more than one purpose. (Land used for buildings and roads)

Question 9

Derived demand.

Answer 9

When the demand for one good comes from the demand for another. (Labour)

Question 10

Demand.

Answer 10

The amount that consumers are willing and able to buy at each given price level.