Demand Flashcards
What does a demand curve show?
The relationship between price and
quantity demanded.
What is a market?
Market is a voluntary meeting of buyers and sellers.
What does a free market do?
A free market allocates resources based on demand
and supply and the price mechanism.
How is price determined in a market economy?
In a market economy, price is determined by market demand and supply.
What is individual demand?
An individual consumer’s demand for a good refers to the quantity of that good one is willing and able to buy at different prices over a period of time, holding all other
factors constant.
What does demand refer to?
Demand (D) refers to quantities demanded (Qd) at different prices
What does quantity demanded refer to?
Quantity demanded (Qd) refers to the quantity a consumer is willing and able to buy at a particular price. Demand (D) consists of all quantities demanded at different prices.
What is an extension of demand?
Movement down demand curve.
What is a contraction of demand?
Movement up a demand curve.
What is the law of demand?
The law of demand states that the lower (higher) the price of a good, the greater (smaller) its quantity demanded over a period of time, ceteris paribus (i.e. holding all other factors constant.)
What are the main conditions of demand?
- The prices of substitute goods or goods in competing demand
- prices of goods in joint demand or complementary goods
- personal income/disposable income
- tastes and preferences
-population size
How can an increase in disposable income affects demand?
demand for normal good increases
demand for inferior goods decrease
What are some examples of inferior goods?
McDonald’s coffee VS Starbucks coffee
Instant noodles, canned food, meal deals
Generic brand products v name-brand
Examples of complementary goods?
tennis racket + tennis balls
mobile phones + cables + chargers
cars + petrol
Expectations are?
Expectations on future prices which may be influenced by many factors.
