Booklet 2 - Demand and Supply

Question 1

Demand

Answer 1

The quantity of a good/service that consumers are willing and able to buy at any possible price.

Question 2

Demand curve

Answer 2

Total quantity of all sales made at different prices. The adding together of everyone’s individual demand curves. (Graph top left to bottom right)

Question 3

A market

Answer 3

Any place where buyers and sellers meet to exchange goods and services. Doesn’t have to be a physical place.

Question 4

Law of demand

Answer 4

A law that states there is an inverse relationship between quantity demanded and price

Question 5

Veblen Good

Answer 5

Increase in price leads to an increase in demand, status symbol

Question 6

Consumer Surplus

Answer 6

Extra value consumers gain above the price paid

Question 7

Marginal Consumer

Answer 7

Next consumer willing to buy a good or service

Question 8

Normal good

Answer 8

A good where an increase in income leads to an increase in demand

Question 9

Inferior Good

Answer 9

A good where increase in income leads to a decrease in demand

Question 10

Giffen Good

Answer 10

A good where demand increases and price increases, and demand decreases as price decreases. (existence is debated)