Demand Flashcards
What do we mean by “demand” in economics?
Demand relates to a consumer’s desire to purchase goods and services and willingness to pay a specific price for them.
Why is the demand curve downward sloping?
due to the law of demand, which states that the demand for a product rises with the fall in price and vice versa.
How does a change in price affect the quantity demanded in a market?
A change in price causes the quantity demanded to move along the demand curve: a price increase leads to a decrease in quantity demanded, and a price decrease leads to an increase in quantity demanded.
What causes the entire demand curve to shift?
The entire demand curve shifts due to changes in factors like income, tastes, prices of substitutes or complements, population, or expectations.
How do we derive demand curves for an entire market
summing the individual demand curves of all consumers at each price level.
What is meant by Joint demand?
When two goods are demanded together because they are used together, like cars and petrol.
What is meant by competitive demand in economics?
When goods are substitutes, so an increase in demand for one reduces demand for the other, like tea and coffee.
What is meant by composite demand?
Composite demand: When a good is demanded for multiple uses, like milk for drinking or cheese production.
What are complements?
Goods consumed together, where demand for one increases demand for the other, like printers and ink.
What are substitutes?
replace each other, so demand for one increases if the other’s price rises, like butter and margarine.
