chp 7 Flashcards
Demand
The individuals must be able to afford a product and that a firm is prepared to sell this product to them.
The willingness and ability to buy a product
Demand and price relationship
Inversely related
Individual demand
The amount of a product an individual would be willing and able to buy at different prices. A consumers demand for a product
Market demand
For a product is arrived at by the aggregation of the demand of all potential consumers or buyers. Total demand for a product
What can a demand curve diagram be used to demonstrate how
A change in the price of a product affects the quantity that is demanded.
Extension in demand.
A rise in the quantity demanded caused by a fall
In the price of the product itself
Contraction in demand
A fall in the quantity demanded caused by a rise in the price of the product itself
Extension in demand and contraction in demand is referred to
Quantity demanded
Refer to the weekly demand for cinema tickets. Reproduce the demand curve and identify
An extension in demand as the price of cinema tickets falls from
22 to 16
A contraction in demand as the price of cinema tickets increase from 13 to 16
Y axis price
X axis number of tickets
1st graph decrease curve (an extension in demand)
2nd a contraction in demand an increased curve
Changes in demand
Shifts in the demand curve
Any change in femalnf will cause a
Shift in the entire demand curve as there is no change in the price of the product
What caused changes in demand
Income level
Other factors
Taste and fashion
Population
Advertising
Prices of substitutes and complements
Relegated products
Substitutes and complements
Substitute
A product that can be used in place of another
Complement
A product that is used together with another product
Normal goods
A product whose demand increases when income increases and decreases when income falls
Inferior goods
A product whose demand decreases when income increases and increases when income falls
How is a good either a normal or inferior
Depends on the income level of consumers
Increases in demand
A rise in demand at any given price causing the demand curve to shift to
The right
Decrease in demand
A fall in demand at any given price causing the demand curve to shift to the left
The sale of upmarket Range Rover Evoque vehicles in China increased by 19% in 2016. Explain two reasons for the increase in demand and how this affects the demand curve.
Two possible reasons for the increase in demand could be an increase in disposable incomes of some Chinese consumers and a major advertising campaign for this upmarket vehicle. The increase in demand will lead to a shift to the right in the demand curve.
Sambas is a popular sauce widely used in Indonesiahome cooking. Suppose there has been a decrease in demand for sambal.
State the effect on the demand curve of the sauce
Identify two reasons for the fall in demand
I) The demand curve for sambal shifts to the left.
I) Reasons for fall in demand may include a fall in the price if similar cooking sauces, or an
in creases in the price of complements such as
fish and vegetables.
What is the relationship between demand and price
An inverse one whereby a decrease in price leads to an increase in quantity demanded and an increase in price leads to a decrease in quantity demanded
Demand curve show
A contraction in demand curve
A decrease in demand explain what it means
A contraction in demand is shown by a movement up the demand curve. This is a consequence of a rise in the price of the product
A decrease in demand is shown by a shift to the left of the demand curve.
This means that there is a fall in demand at any given price
Give three reasons why the demand for chocolate is falling in many developed countries
An increase in the price of chocolate
A growing awareness of the health risks of consuming too much sugar
Greater availability of healthier alternatives
Explain the likely effects on the demand for a well-known brand of cola when i its price increases
i there is an increase in the price of a substitute brand of cola.
An increase in the price of this brand of cola is shown by a movement up the demand curve to point B where price is now P2 and the quantity demanded is reduced
An increase in the price of a substitute brand of cola is represented by a shift outwards of the demand curve. At any price such as p2 more will be demanded
Global sales of electric vehicles have increased by over 1000% since 2012.
Explain two likely causes of this increase in demand.
An increase in the price of petrol vehicles
A positive shift in favour of electric vehicles for environmental reasons
And advertising campaign by electric vehicle manufacturers
An increase in disposable incomes
A new smart-phone has been launched, but its price is higher than expected. What will happen to a person’s Willingness and ability to purchase this product?
Decrease in the willingness and a decrease in the ability
A retailer decreases the price of a poorly selling product. What will happen to the demand curve?
There will be a movement down the demand curve
A government advertising campaign links the excessive consumption of fizzy drinks with type 2 diabetes. What will happen to the market demand curve for fizzy drinks?
It will shift to the left
If sales of chicken and rice from local takeaway stalls have been falling when income levels have been increasing, what type of goods might chicken and rice be?
Inferior goods
