Demand

Question 1

What is a market?

Answer 1

A situation where buyers and sellers communicate and exchange goods and services for money

Question 2

What is:

Demand

Answer 2

Demand is the quantity of goods and services that people are willing to buy at a given price in a given period of time

Question 3

What is:

Market demand

Answer 3

Market demand is the demand for goods and services by all people within a market, added together

Question 4

What is the:

Law of Demand

Answer 4

The Law of Demand states that if the price of a good or service rises, the quantity of demand will fall. Likewise, if the price of a good falls, then the quantity demanded will increase ceteris paribus

Question 5

What is:

Contraction of demand

Answer 5

When quantity demanded decreases as a result of an increase in price. This is shown by a movement along a demand curve

Question 6

What is:

Expansion of demand

Answer 6

When quantity demanded increases as a result of a decrease in price. This is shown by a movement along a demand curve

Question 7

What is:

Substitute goods

Answer 7

Products which are possible alternatives for each other, so that a change in price of one will affect the demand for the other

Question 8

What are:

Complementary goods

Answer 8

Products that are consumed together. Therefore, a change in demand for one will lead to a change in demand for the other

Question 9

What is shown by the:

Demand curve

Answer 9

The relationship between price and quantity demanded

Question 10

What is the shape of the:

Demand curve

Answer 10

A straight line, but in reality it is a curve like the bottom half of a ‘c’

Question 11

What is the:

Ceteris Paribus Assumption

Answer 11

Latin phrase meaning “all other things being equal”

Question 12

What is the acronym for:

Factors that shift the demand curve:

Answer 12

Population
Advertising
Credit Availability
Income
Fashion, Tastes and Trends
Income Tax
Complements price
Subsitutes price

Question 13

What is the affect of:

Population on the demand curve

Answer 13

With more people, more people will be willing to buy the product , leading to an outward shift of the demand curve

Question 14

What is the affect of:

Advertising on demand

Answer 14

Businesses try to influence customers thorugh advertising, meaning that more people will buy the product, leading to the demand curve shifting outwards

Question 15

What is the affect of:

Credit availability on the demand curve

Answer 15

If intrest reates are low, it means that people have more money as they borrow more money and therefore they will want to buy more meaning demand increases leadng to an outward shift of the demand curve.

Question 16

What is the affect of:

Income on demand

Answer 16

With higher income, people have more money and buy more leading to an increasing demand and therefore to an outward shift of the demand curve

Question 17

What is the affect of:

Fashion, Tastes and Trends on the demand curve

Answer 17

If the fashion is to buy a product, demand of that price rises leading to an outward shift of the demand curve. Opposite applies

Question 18

What is the affect of:

Income tax on the demand curve

Answer 18

The higher the income tax is the less people have money so the less they spend meaning demand goes down and curve shift inwards

Question 19

What is the affect of:

Price of complements

Answer 19

If price of complements go down, total cost of buying both goods goes down leading to increasing demand due to total cost decreasing and an outward shift of the demand curve

Question 20

What is the effect of:

price of substitutes on demand curve

Answer 20

If price of substitutes goes down, people are more likely to buy the other product so demand goes down leading to an inward shift of the demand curve