DEMAND

Question 1

What is demand?

Answer 1

a quantity of a good/service that consumers are able and willing to buy at a given price during a given period of time.

Question 2

Law of demand

Answer 2

Demand increases, As pricedecreases, inverse relationship

Question 3

What are the factors that shift the** demand curve**
PIRATES

Answer 3

Popualtion
Income
Related Goods
Advertising
Tastes and Fashions
Expectations
Seasons

Question 4

POPULATION (PIRATES)

Answer 4

larger population = higher demand
Changing the structure of the population also affects demand, such as the distribution of different **age groups. **

Question 5

INCOME (PIRATES)

i

Answer 5

more disposable income=** afford **more goods, so demand **increases. **
a consumer’s wealth affects their demand.

Question 6

RELATED GOODS (PIRATES)

Answer 6

substitutes or complements
A substitute can** replace** another good -* Apple & Samsung*
A complement **goes with **another good - Apple & Airpods

Question 7

ADVERTISING (PIRATES)

Answer 7

. This will increase consumer loyalty to the good and** increase** demand.

Question 8

TASTES AND FASHION (PIRATES)

Answer 8

demand curve will also shift if consumer tastes change. For example, the demand for physical books might** fall, if consumers **
start preferring to read e-books

Question 9

EXPECTATIONS (PIRATES)

Answer 9

This is of** future price changes**. If speculators expect the
price of shares in a company to increase in the future, demand is likely to
increase in the present.

Question 10

SEASONAL (PIRATES)

Answer 10

Demand changes according to the season. For example, in the
summer, the demand for ice cream and sun lotions increases.

Question 11

What is the Price Elasticity of Demand (PED)
What is the formula?

Answer 11

The price elasticity of demand is the responsiveness of a change in demand to a change in price.
The formula for this is: % change of QD / % change of Price

Question 12

Substitution effect

Answer 12

If price increases, consumers switch to a cheaper alternative

Question 13

Income effect

Answer 13

If priceincreases, reduced disposable income may reduce demand

Question 14

Inferior Good

Answer 14

Demand decreases as income increases

Question 15

What way does the demand curve slope?

Answer 15

DOWNWARDS

Question 16

Effective Demand

Answer 16

The desire for a product backed up by ability to pay, rather than unlimited want

Question 17

Substitute Good

Answer 17

A good that canreplace a similar one
(Apple and Samsung)

Question 18

Complementary Good

Answer 18

Good whose demand is linked to the price of another product
(Phone and Phone Cases)

Question 19

Related Goods

Answer 19

Products whose demand is influenced by a price change in another

Question 20

Productive Efficiency

Answer 20

Whenan economy is utilisingall their resoucres
Occurs anywhere along the PPC

Question 21

Allocative Efficiency

Answer 21

meeting the needs of consumers
only appears at one point

Question 22

PPC/ SHORT RUN
What is being used up

Answer 22

society is utilising their short resources
spare resources are being used up

Question 23

PPC/LONG RUN
outward shift

Answer 23

firms have access to advanced tech/full employment (labour)

Question 24

Consumer surplus

Answer 24

difference between what consumers are prepared to pay for a good and what they actually pay

Question 25

**producer surplus**

Answer 25

difference betweenwhat producers are willing/able to supply for a good and the price they actually recieve.

Question 26

**Price elastic demand** example change in demand is more than change in price

Answer 26

demand is **very responsive** to a change in **price** **food, coke**

Question 27

**price inelastic demand** change in demand is less than change in price

Answer 27

demand is **not** very **responsive** to a **change in price** **necessity/fashionable**