Demand 1.2.1 Flashcards
What dos ‘demand’ refer to
The number of goods and services a customer wants to/will be at a certain time
When and how does effective demand occur
When customers can and will buy at the given price
What is the basic law of demand
There is an inverse relationship between the quantity that customers demand and the price:
- as price increases, quantity decreases
Which way does the demand slope curve
From left to right
What is on the x axis of a demand curve
quantity
What is on the y axis of a demand curve
price
What happens if there is a change in any other factors affecting demand
The entire curve will shift either left or right
What is the difference between a change in factors, and a change in price on a demand curve
- factors shift the curve left or right
- price causes movement along the curve
7 examples of non-price factors affecting demand
- price of competitors
- advertising
- income changes
- changing demographics
- external shocks
- seasonality
- changes in taste/trends
how and why does competitors price changing affect the demand curve
- customers will buy cheaper substitutes
- shifts demand for competitors/substitutes to the right
how and why does the decrease complementary goods that go together affect the demand curve
- one is less profitable without the other so will both shift to the left
how and why does a change in customer incomes affect the demand curve (increase in income)
demand for branded goods will increase and therefore these will shift to the right
how and why does a change in customer incomes affect the demand curve (decrease in income)
demand for own label inferior goods will increase and therefore these will shift to the right
how and why do trends affect the demand curve
if goods/services become more popular their demand will increase and shift to the right
how and why does advertising affect the demand curve
if more money is spent of advertising, more customers will become aware of the brand and demand will increase, shifting the curve to the right
how and why do demographics affect the demand curve
if a country’s population changes (e.g. fewer babies are being born’ demand for baby products will decrease and the curve will shift to the left
how and why does seasonality affect the demand curve
demand varies at different times of the year so the demand curve can fluctuate
how and why do unexpected events affect the demand curve
people may panic-buy specific items (e.g. toilet roll) so the demand curve for toilet roll shifts to the right
if demand increases, which way does the curve shift
to the right
if demand decreases, which way does the curve shift
to the left
definition of demand curve
the quantity needed for a product and different times/price points
