Chapter 2 - Demand In A Market

Question 0

Define Effective Demand

Answer 0

Demand supported by the ability to pay for a good or service.

Question 1

Define Demand

Answer 1

The amount that consumers are willing and able to buy at each given price level.

Question 2

Define Market Demand

Answer 2

Total demand in a market for a good the sum of all individuals’ demand, at each given price.

Question 3

Define Contractions In Demand

Answer 3

Falls in the quantity demanded caused by rises in prices.

Question 4

Define Extensions In Demand

Answer 4

Increases in demand caused by changes (falls) in price.

Question 5

Define Normal Goods

Answer 5

Goods and services that will see an increase in demand when income rise.

Question 6

Define Inferior Goods

Answer 6

Goods or services that will see demand fall when income rises.

Question 7

Define Complementary Products

Answer 7

Goods that are consumed together, for example bread and butter, or DVD’s and DVD players.

Question 8

Define Composite Demand

Answer 8

A good that is demanded for more than one purpose do that an increase in demand for one purpose reduces the available supply for the other purpose, typically leading to higher prices, e.g. Milk used in butter and cheese.

Question 9

Define Derived Demand

Answer 9

When the demand for one good or service comes from the demand for another good or service. The demand for cars stimulates the demand for steel, therefore the demand for steel is derived demand.