Demand

Question 1

Define Demand

Answer 1

the quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period

Question 2

What is effective demand

Answer 2

The desire for a good or service backed up by the ability to pay

Question 3

What is derived demand?

Answer 3

Demand for a FOP used to produce another good or service

Question 4

What is the law of demand?

Answer 4

there is an inverse relationship between price and quantity demanded

As prices fall - we see an expansion in demand and vice versa

Question 5

What does the demand curve show?

Answer 5

relationship between price and quantity demanded

Question 6

What is the income effect

Answer 6

a change in quantity demanded caused by a change in consumer income

Question 7

What is the substitution effect?

Answer 7

when consumers react to an increase in a good’s price by consuming less of that good and more of a substitute good

Question 8

What is the law of diminishing marginal utility?

Answer 8

The satisfaction received by obtaining one more unit of a good declines as one consumes more of it

Question 9

What are the conditions of demand

Answer 9

Substitute goods

Complements

Income

Distribution of income

Taste and Preference

Interest Rates

Size and age structure of population

Question 10

What is Joint Demand

Answer 10

Demand for one product is positively related to demand for a related goods or service

Question 11

What is composite demand

Answer 11

Demand where a product has more than one use