8 - Demand

Question 1

How can we explain changes in the prices of goods and services?

Answer 1

Develop a model that brings consumers and producers together

Question 2

What is demand?

Answer 2

Quantity of a good or service purchased at a given price over a given time period

Question 3

What does the law of demand state?

Answer 3

Price of good increases, quantity demanded decreases which creates an contraction in demand (demand line to the right)
Opposite is expansion (decrease = demand curve to the left)

Question 4

How do you show expansion or contraction on a diagram?

Answer 4

Movement along a demand curve

Question 5

What are substitute goods?

Answer 5

Two products that could be used for the same purpose

Bus and Train, Pencil and Pen

Question 6

What are complement goods?

Answer 6

Products that are used together

Petrol and Car, Toothbrush and Toothpaste

Question 7

What factors can affect demand?

Answer 7

Change in age structure of population
Changes in income (more income, more demand)
Advertising
Changes in consumer taste