demand

Question 1

Explain the relevance of ceteris paribus is broken to a shift in the demand curve.

Answer 1

It is only when ceteris paribus us broken that the demand curve shifts.

Question 2

Identify reasons for a decrease in demand

Answer 2

decrease in
-disposible income -price of a substitute 
increase in
-direct tax
-price of a complement.
PRODUCT IS OUT OF FASHION

Question 3

Why do individuals buy more at a lower price

Answer 3

they can afford more/ willing and able to buy more.

Question 4

impact on percentages of household income saved and consumed when income rises.

Answer 4

savings % increases/ consumption% decreases. More income means more saving possible.

Question 5

what is meant by fair-trading.

Answer 5

Doing what is right and just when dealing with others / Not cheating or deceiving others.

Question 6

What is meant by the term values

Answer 6

core beliefs or key principles or those things we consider most important, for example honestly, consideration of others, fair trading, integrity

Question 7

factors that determine values that individuals may hold

Answer 7

Age, gender, upbringing, religion culture, gender, peer pressure.

Question 8

Household income after govt. taxes and transfer payments is termed.

Answer 8

disposable income.

Question 9

define the term household.

Answer 9

an economic unit of consumption.

Question 10

what is the link between income and spending.

Answer 10

As income rises so will consumption. The level of consumption is lower than the level of income because income tax is deducted or some income is saved not spent.

Question 11

Define aggregate household spending.

Answer 11

the total spending of all house holds in an economy.

Question 12

What is the relationship between limited means and the need to make decisions?

Answer 12

Individuals have limited means (income, time and skill) so can not afford to buy everything they want or have sufficient time to do everything, so they must make choices.

Question 13

Explain how the concept of choice, opportunity cost and scarcity are linked

Answer 13

Scarcity means individuals have limited means( income and time so choices need to be made between alternatives. Every choice results in an opportunity cost which is the next best alternative forgone.

Question 14

describe how an individuals family might help meet their needs.

Answer 14

providing food, providing a service, giving a loan or trust fund

Question 15

describe the law of demand

Answer 15

A fall in the price of a good or service will lead to an increase in quantity demanded ceteris paribus

Question 16

Explain the concept of luxuries

Answer 16

luxuries are goods and services that make life more comfortable and enjoyable but households could manage without them

Question 17

Describe the economic relationship between a desktop computer and a laptop computer.

Answer 17

Desktop computers and laptop computers are substitutes, they can be used in place of each other. As the price of a desktop computer increases the quantity demanded for these will fall. The demand for laptop computers will increase because they are now relatively cheaper

Question 18

Explain the difference between a change in quantity demanded and a change in demand

Answer 18

A change in the quantity demanded results from a change in the price of a product. There is a movement along the existing demand curve. A change in demand is when the entire demand curve shifts to a new position and is caused by a change in disposable income , taste or change in the price of a substitute or compliment.

Question 19

why might an increase in disposable income result in a fall in demand for some products?

Answer 19

As income increases an individual may switch and buy better quality products the demand for the inferior product will therefore fall.

Question 20

Explain the concepts of necessities

Answer 20

Necessities are goods and services households must have in order to sustain life for examples food, water, shelter

Question 21

explain the relationship between income level and type of goods and services purchased.

Answer 21

At lower levels of income a high proportion of income is spent on necessities. At higher levels of income a greater proportion is spent on luxuries.

Question 22

Explain the term inferior goods

Answer 22

Inferior goods are cheaper or lower quality goods and services that we are likely to buy less of as our income increases. eg cheap cuts of meats

Question 23

Explain the concept of choices.

Answer 23

idea of a decision between alternatives e.g.. going out to a movie, renting a dvd.

Question 24

Explain the effect of a decrease in direct income tax on demand.

Answer 24

if the direct income tax rates decrease, individuals disposable income would increase. this means they can afford to buy more and more will be demanded at each and every price.

Question 25

Explain the concept of an opportunity cost.

Answer 25

the next best alternative forgone when a decision is made. it is the second ranked option missed out on.

Question 26

Describe what is meant by consumer.

Answer 26

A consumer is a person who buys/uses goods and/or services

Question 27

What is meant by ceteris paribus?

Answer 27

Ceteris paribus describes the assumption of holding all other factors unchanged.

Question 28

Define consumer demand

Answer 28

the amount of a good or service a consumer is willing and able to purchase at a rage of prices

Question 29

Describe the difference between a good and a service

Answer 29

Goods are objects with a physical presence, tangible items. a service is something some one else does for you.

Question 30

identify reasons for an increase in demand

Answer 30

increase in - disposable income
-advertising - price of a substitute
Decrease in -direct tax - price of a compliment
PRODUCT IS IN FASHION

Question 31

Explain the concept of scarcity

Answer 31

The economic term that describes the condition of limited resources relative to unlimited wants