Demand 1.2.1

Question 1

What is demand?

Answer 1

The number of goods/services customers are willing ands able to buy at a given price.

Question 2

Relationship between quantity demanded and price

Answer 2

Inverse relationship
- as price increases, quantity demanded decreases
- downward slope on demand curve

Question 3

Change in price of substitutes

Answer 3

Substitute goods are replacement goods. If rival increases price then demand will increase so curve shift to right.

Question 4

Change in the price complement

Answer 4

Complementary goods are goods consumer together.

Question 5

Change in consumer income

Answer 5

As consumer income rises demand for normal goods increases.

Question 6

Fashions, tastes and preferences

Answer 6

If goods become more fashionable then demand increases.

Question 7

Advertising and branding

Answer 7

If more money if spent of advertising then this increases demand as there is increased loyalty and awareness.

Question 8

Demographics

Answer 8

If the structure or size of a country’s population changes, then the demand for goods/services will also change.

Question 9

Seasonality

Answer 9

Demand varies at different times of the year.

Question 10

External shocks

Answer 10

An unexpected event can change the demand.