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GCSE Economics > 2.2 Demand > Flashcards

2.2 Demand Flashcards

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1
Q

What is demand?

A

The quantity of a good or service that consumers are willing and able to buy at a given price in a given period of time

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2
Q

What is derived demand?

A

The demand that comes about due to the demand for another product

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3
Q

What is the law of demand?

A

As the price increases demand decreases, as the price decreases demand increases

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4
Q

What is individual demand?

A

Each individual will have their own demand curve for a good or service.

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5
Q

What is market demand?

A

The total demand for a good or service

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6
Q

What is a shift of the demand curve?

A

When the actual demand curve shifts, The quantity demanded at each price changes.

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7
Q

What is a movement along a demand curve?

A

When price moves up or down

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8
Q

What causes a movement along a demand curve?

A

Changes in price only

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9
Q

What causes a shift of the demand curve?

A

Non-price factors only

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10
Q

What 2 directions can the demand curve shift?

A

Left or right

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11
Q

Has demand increased or decreased if it shifts to the right (outward)?

A

Demand has increased

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12
Q

Has demand increased or decreased if it shifts to the left (inward)?

A

Demand has decreased

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13
Q

What are 8 non-price factors that could cause a shift in demand?

A

Income, Marketing, Tastes & fashion, Substitutes & complements, population, government policies, economic situation, price expectations

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14
Q

What are the consequences of the shift of the demand curve?

A

Most important consequence is that for nearly all products, it will lead to the price and quantity of the good moving in the same direction

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15
Q

What are some possible issues with a shift of demand?

A
  • If the price rises, but income rises faster, consumers will be able to demand more, despite the price rise.
  • Demand for substitute products will fall if people prefer other goods and services.
  • Increase in demand may allow producers to gain better economies of scale. This could allow them to either cut the price, which means movement down the demand curve or to enjoy higher profits.
  • If demand falls, producers may go out of business if they can no longer make a profit.
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16
Q

when the price moves up the curve is it expansion or contraction?

A

Contraction

17
Q

What is an expansion of demand?

A

When the price falls and the quantity increases

18
Q

What is price elasticity of demand?

A

The measure of the responsiveness of quantity demanded to a change in the price of the product

19
Q

What is the formula for PED?

A

% change in quantity demanded divided by % change in price

20
Q

When is demand elastic?

A

when the percentage change in demand is greater than the percentage change in price. In other words when a % change in price causes a bigger % change in demand

21
Q

When is demand infinitely elastic?

A

When an increase in price leads to zero quantity demanded. And a fall in price leads to an infinite amount being demanded

22
Q

What value does price elastic have?

A

-1 and infinity

23
Q

When is demand inelastic?

A

When a percentage change in price leads to a smaller change in % change in demand

24
Q

When is demand infinitely inelastic?

A

When a percentage change in price leads to no change in quantity being demand

25
Q

what value does inelastic demand have?

A

Between 0 and -1

26
Q

Why is there a minus sign in front of the values?

A

it means the demand curve slops downwards i.e. it obeys the law of demand

27
Q

What is the value for perfectly price inelastic?

A

0

28
Q

What is the value for perfectly price elastic?

A

Infinity sign

29
Q

What is the value for unitary price elastic?

A

-1

30
Q

What is unitary price elastic?

A

Demand is of unitary price elastic if a percentage change in price gives rise to an equal percentage change in demand

31
Q

How are consumers who buy products with inelastic demand affected?

A

Consumers who purchase goods with inelastic demand are affected because governments may impose high levels of taxation on these goods and services. this is because they know that they can raise the tax revenue on goods and services that consumers need.

32
Q

How does knowing the value of elasticity useful to producers?

A

Knowing the value of elasticity , the producer would be able to calculate the effect on quantity of a change in price

GCSE Economics (21 decks)

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