Chapter 3: Demand

Question 1

Define demand

Answer 1

The quantity of a good or a service that consumers are willing and able to buy given its price, the price of other goods and consumers incomes and preferences

Question 2

Define joint demand

Answer 2

Demand for goods that are interdependent, such that they are demanded together

Question 3

Define composite demand

Answer 3

Demand for a good that has multiple uses

Question 4

Define competitive demand

Answer 4

Demand for goods that are in competition with each other

Question 5

Define ceteris paribus

Answer 5

A latin phrase meaning ‘all other things being equal’ - it is used in economics when we focus on changes in one variable while holding other influences constant

Question 6

Define law of demand

Answer 6

A law that states there is an inverse relationship between quantity demanded and the price of a good or service , ceteris paribus

Question 7

Define demand curve

Answer 7

A graph showing how much of a good will be demanded by consumers at any given price

Question 8

Define normal good

Answer 8

One where the quantity demanded increases in response to an increase in consumer incomes

Question 9

Define inferior good

Answer 9

One where the quantity demanded decreases in response to an increase in consumer incomes

Question 10

Define substitues

Answer 10

Two goods are said to be substitutes if consumers regard them as alternatives, so that the demand for one good is likely to rise if the price of the other good rises

Question 11

Define complements

Answer 11

Two goods consumed jointly, so that an increase in the price of one good causes demand for the other good to fall

Question 12

Define consumer surplus

Answer 12

The value that consumers gain from consuming a good or a service over and above the price paid