Demand

Question 1

What is the idea behind demand ?

Answer 1

as the price of something goes up the quantity of consumers willing to pay goes down and vice versa

Question 2

What is demand ?

Answer 2

the quantity of a good that consumers are willing and able to purchase at various prices during a given time

Question 3

What direction does a demand curve go in ?

Answer 3

down

Question 4

What causes a movement along the demand curve ?

Answer 4

price changes ONLY

Question 5

What can demand do on a demand curve (movement) ?

Answer 5

expand or contract

Question 6

What does not cause a shift on the demand curve ?

Answer 6

price changes

Question 7

What does an inward shift mean ?

Answer 7

less quantity demanded

Question 8

What does an outward shift mean ?

Answer 8

more quantity demanded

Question 9

What are the factors that shift the demand curve (PIRATES) ?

Answer 9

population
income
related/complement goods
advertising
tastes and fashions
expectations
seasons

Question 10

What is meant by population ?

Answer 10

more people = more demand

Question 11

What is meant by income ?

Answer 11

more disposable income = more people being able to afford = more demand

Question 12

What is meant by related goods ?

Answer 12

a substitute being able to replace an original good if it’s cheaper

Question 13

What is meant by complement goods ?

Answer 13

something that pairs with another good e.g. strawberries and cream

Question 14

What is meant by advertising ?

Answer 14

more of it can increase loyalty and therefore demand

Question 15

What is meant by tastes and fashions ?

Answer 15

as tastes change demand will fluctuate

Question 16

Wha is meant by expectations ?

Answer 16

if future prices are expected to change demand now will reflect the change

Question 17

What is meant by seasons ?

Answer 17

demand changes according to the season e.g. pumpkins at Halloween

Question 18

What is effective demand ?

Answer 18

willingness to buy along with the ability to pay

Question 19

What is consumer sovereignty ?

Answer 19

consumers deciding what will be produced and firms supplying that to get revenue.

Question 20

What do consumers decide ?

Answer 20

how resources will be used

Question 21

What is the invisible hand ?

Answer 21

a greater demand creating an incentive for firms to produce more and meet it

Question 22

What happens if resources cost more/become scarce ?

Answer 22

prices will be raised and consumers will buy less; it is the same if the roles are reversed

Question 23

What do movements along a demand curve mean ?

Answer 23

the price has changed and the quantity demanded has changed

Question 24

What do shifts on the demand curve mean ?

Answer 24

a determinant has changed and the demand has changed