Demand Flashcards
1
Q
Why is the demand curve downward sloping?
A
- When prices go down, consumption increases as purchasing power increases
- New consumers enter the market as it is the cheaper substitute so more affordable
2
Q
Extension
A
an increase in quantity demanded as a result of a decrease in price
- a movement down the demand curve
3
Q
Contraction
A
a decrease in quantity demanded as a result of an increase in price
- a movement up the demand curve
4
Q
A shift in the demand curve
A
How demand responds to a change in a non-price factor
5
Q
Joint Demand
A
When two goods are compliments and need to be brought together
6
Q
Competitive demand
A
When two goods are substitutes and both have the same function
7
Q
Composite demand
A
When goods have multiple uses and can be used for many purposes
8
Q
Effective demand
A
when consumers are willing and able to buy the good or service
9
Q
Shifts of the demand curve
A
- income
- price of substitutes
- price of complements
- consumer preference
