CHAPTER 8 DEMAND

Question 1

Conditions of demand

Answer 1

Factors other than price, such as income or the price of other good, which lead to changes in demand and are associated with shifts in the demand curve.

Question 2

Consumer surplus

Answer 2

The difference between how much buys are prepared to pay for a good and what they actually pay.

Question 3

Contraction of demand

Answer 3

When quantity demanded for a good falls because its price rises; it is shown by a movement up in the demand curve.

Question 4

Demand curve

Answer 4

The line on a price/quantity diagram which shows the level of effective demand at any given price.

Question 5

Demand or effective demand

Answer 5

The quantity purchased of a good at any given price, given that other determinates of demand remains un changed.

Question 6

Extension of demand

Answer 6

When quantity demanded for a good increases because its price falls; it is shown by a down movement in the demand curve.

Question 7

Law of diminishing marginal utility

Answer 7

The value of utility that individual consumers gain from the last product consumed falls the greater the number consumed. So the marginal utility of consuming the sixth product is lower that the second product consumed.

Question 8

Shift in the demand curve

Answer 8

A movement of the whole demand curve to the right or left in the original caused by a change in any variable affecting demand except price.