Demand

Question 1

What is competition in economics?

Answer 1

Occurs when there are many buyers and sellers acting independently, meaning no one has the ability to influence the price a product is sold for.

Question 2

Define ‘demand’

Answer 2

Concerned with the behaviour of buyers. The demand of an individual consumer indicates the various quantities of a good or service the consumer is willing and able to buy at different prices during a particular time period, ceteris paribus.

Question 3

Outline the law of demand.

Answer 3

When the price goes up, the quantity demanded goes down. When the price goes down, the quantity demanded goes up.

Question 4

What is market demand?

Answer 4

Sum of all individual demands for a good.

Question 5

What is a non-price determinant?

Answer 5

Variables other than price which influence demand. Change in price causes a shift along the demand curve.

Question 6

What does a rightward shift indicate?

Answer 6

More is demanded for the given price. Increase in demand.

Question 7

What does a leftward shift indicate?

Answer 7

Less is demanded for the price. Decrease in demand.

Question 8

Define ‘normal’ and ‘inferior’ goods.

Answer 8

Normal: when demand increases in response to an increase in consumer income.
Inferior: when the demand decreases in response to an increase in consumer income.

Question 9

Define ‘substitute’ and ‘complementary’ goods.

Answer 9

Substitute: two goods are substitutes if they satisfy a similar need.
Complement: two goods are complements if they tend to be used together.