5: Demand

Question 1

Normal Goods (2)

Answer 1

• Ones for which sales move in line
• With changes in consumer incomes

Question 2

Demand (1)

Answer 2

• The level of interest customers have in buying a product

Question 3

Substitutes (3)

Answer 3

• Products or services in competition with each other
• So customers will substiute one for each other
• e.g. Dairy Milk/Galaxy

Question 4

Luxury Goods (2)

Answer 4

• Ones for which sales rise when people are better off
• But fall when consumers are struggling financially

Question 5

Complementary Goods (2)

Answer 5

• Goods bought in conjunction with each other
• Such as bacon and eggs

Question 6

Factors affecting demand for a product/service (8)

Answer 6

• Prices
• Competition
• Consumer incomes (E.g. Normal/inferior etc)
• Social trends (E.g. Health)
• Advertising/Branding (Percieved value)
• Demographics
• External shocks
• Seasonal factors

Question 7

Seasonal variation (2)

Answer 7

• Change in the value of a variable (e.g. sales)
• Relating to seasons

Question 8

Inferior Goods (2)

Answer 8

• Ones for which sales fall when people are better off
• But rise when consumers are struggling financially

Question 9

Two risks of demand (6)

Answer 9

• Undiversified demand
• E.g. a farm dependent on one supermarket
• Overtrading
• Demand rising too fast can cause overtrading
• So the firm can’t generate enough cash
• To meet rising production levels