2.2 Demand

Question 1

What is demand?

Answer 1

The quantity that buyers are willing and able to buy at a given price in a given period of time

Question 2

What is effective demand?

Answer 2

A buyer must be willing and able to buy at a given price to be considered as part of effective demand in a market

Question 3

What is the law of demand?

Answer 3

It states that the quantity demanded will usually increase as price falls and quantity will usually fall as fall as price rises, ceteris paribus - there is usually an inverse relationship between price and quantity demanded

Question 4

How do changes in price cause a movement along the demand curve and why is the demand curve downward sloping?

Answer 4

Income (and wealth) effect, substitution effect

Question 5

What causes the demand curve to shift?

Answer 5

If any non price factors affecting demand change

Question 6

What is a normal good?

Answer 6

Products that have a positive relationship between income and quantity demanded

Question 7

What is an inferior good?

Answer 7

Products that have a negative relationship between income and quantity demanded

Question 8

What is competitive demand?

Answer 8

Demand for goods in competition with each other - substitutes

Question 9

What is joint demand?

Answer 9

When goods are demanded together - complements