Demand

Question 1

quantity demanded

Answer 1

quantity (amount) of goods/services demanded (bought) at a given price

Question 2

demand (curve)

Answer 2

combination of all quantities demanded

Question 3

law of demand

Answer 3

1. the lower the price, the higher the demand; the higher the price, the lower the demand
2. the price and the quantity demanded are inversely related
   = a negative slope

Question 4

determinants of demand (1)
Taste - liking, interest

Answer 4

if taste increases, demand increases
= shift of the curve to the right

if taste decreases, demand decreases
= shift of the curve to the left

Question 5

determinants of demand (2)
Income

Answer 5

if income increases and demand increase
= normal good

if income increases and demand decreases
= inferior good

Question 6

determinants of demand (3)
Price of a related good

Answer 6

if the price of a related good increases and the demand increases = substitute good
example: pen and pencil

if the price of a related good increases and the demand decreases = complementary good
example: milk and cereal

Question 7

determinants of demand (4)
Expected/future price

Answer 7

if price is expected increase in the future, the demand increases (now)

if the price is expected to decrease in the future, the demand decreases (now)

Question 8

determinants of demand (5)
Population

Answer 8

if the population increases, the demand increases

if the population decreases, the demand decreases

Question 9

Price determinant of demand (6)

Answer 9

The demand curve does NOT shift!
The quantity demanded changes
= movement along the demand curve

Question 10

Ceterus Paribus

Answer 10

a change in one factor while all the others are assumed constant