2.1 Demand

Question 1

complementary goods

Answer 1

Goods that are jointly consumed and bought together, for example, tooth brush and tooth paste. An increase in price for one could lead to a decrease in demand of the other.

Question 2

demand

Answer 2

The inverse relationship between the price of a good or service and the quantity demanded of that good or service, which consumers are willing and able to buy over a specific period of time, ceteris paribus

Question 3

movements along demand curve

Answer 3

a movement along the demand curve illustrates how changes in the price of a good or service influence the quantity demanded of that good or service

Question 4

shift of demand curve

Answer 4

a change in the demand of a good or service due to non-price determinants (factors other than price), resulting in the entire demand curve moving left (decrease in demand) or right (increase in demand).

Question 5

law of demand

Answer 5

An economic law stating that as the price of a good falls, the quantity demanded of that good will extend, and vice versa, over a certain period of time, ceteris paribus.

Question 6

inferior goods

Answer 6

lower-quality goods for which higher-quality substitutes are available. As consumer incomes increase, the demand for these inferior goods typically decreases, as consumers tend to shift their purchasing preferences toward the more expensive alternatives.

Question 7

market demand

Answer 7

the total quantity of a good or service that all consumers in a market are willing and able to purchase at various price levels, calculated by summing the individual demand of each consumer at each price point for that good or service.

Question 8

normal goods

Answer 8

a type of good for which demand increases as consumer income rises. In other words, when individuals have more income, they tend to purchase more of these goods.

Question 9

substitutes

Answer 9

products that can be used in place of one another because they fulfil similar needs or wants. When the price of one substitute good increases, the demand for the other substitute good typically increases as well, indicating a direct relationship between the two. (e.g. margarine and butter)

Question 10

quantity demanded

Answer 10

the quantity demanded of a good or service that a buyer, or all buyers in a market, are willing and able to purchase at a particular price over a given time period, ceteris paribus.

Question 11

Non-price determinants of demand:

Answer 11

are factors other than the price of a good or service that can influence the quantity demanded by consumers in a market. These determinants can shift the demand curve to the left or right, indicating an increase or decrease in demand at every price level.
○ Income
○ Tastes and preferences
○ Future price expectations
○ Price of related goods (substitutes and complements)
○ Number of consumers

Question 12

related goods

Answer 12

products that have a relationship with each other in terms of consumer demand. the 2 types of related goods are complementary goods and substitute goods.

Question 13

extension of quantity demanded

Answer 13

an increase in the quantity demanded of a good or service that consumers are willing and able to purchase due to a decrease in its price. This is represented as a movement downward along the demand curve.

Question 14

contraction of quantity demanded

Answer 14

a decrease in the quantity demanded of a good or service that consumers are willing and able to purchase due to an increase in its price. This is represented as a movement upward along the demand curve.