Demand

Question 1

Definition of demand

Answer 1

Demand is the amount of a product that consumers are willing and able to purchase at any given price.

Question 2

basic law of demand

Answer 2

Demand is inversely proportional to change in price.

Question 3

Demand curve

Answer 3

Check book

Question 4

ceteris paribus

Answer 4

Everything remains the same

Question 5

Movement / shift in the demand curve

Answer 5

Movement: when there’s a change in price and demand goes up or down the demand curve.

Shift: When there’s a change in something other than price, and the demand increases. Another line drawn.

Question 6

Income / substitute effect

Answer 6

Income effect: Demand changes because income changes.

Substitute effect: When demand of a product changes because of a product that can replace it.

Question 7

Complementary goods

Answer 7

goods that are purchased together because they are consumed together.

Question 8

Inferior goods

Answer 8

goods for which demand will fall if income
rises or rise fi income falls.

Question 9

Normal goods

Answer 9

goods for which demand will rise if income rises or fall if income falls.

Question 10

Substitute goods

Answer 10

goods that can be bought as an alternative to others, but perform the same function.

Question 11

Factors leading to a change in demand

Answer 11

○ Price
○ Prices of substitutions
○ Prices of complements
○ Changes in consumer incomes
○ Fashion, tastes and preference
○ Marketing, advertising and branding
○ Demographics: age, gender, geographical distribution.
○ External shocks: competition, government, economic climate, social
and environmental factors
○ Seasonality