DEMAND Flashcards

1
Q

What is demand?

A

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

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2
Q

Law of demand

A

Demand increases, As pricedecreases, inverse relationship

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3
Q

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

A

Popualtion
Income
Related Goods
Advertising
Tastes and Fashions
Expectations
Seasons

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4
Q

POPULATION (PIRATES)

A

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

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5
Q

INCOME (PIRATES)

i

A

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

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6
Q

RELATED GOODS (PIRATES)

A

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

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7
Q

ADVERTISING (PIRATES)

A

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

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8
Q

TASTES AND FASHION (PIRATES)

A

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

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9
Q

EXPECTATIONS (PIRATES)

A

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.

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10
Q

SEASONAL (PIRATES)

A

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

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11
Q

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

A

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

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12
Q

Substitution effect

A

If price increases, consumers switch to a cheaper alternative

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13
Q

Income effect

A

If priceincreases, reduced disposable income may reduce demand

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14
Q

Inferior Good

A

Demand decreases as income increases

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15
Q

What way does the demand curve slope?

A

DOWNWARDS

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16
Q

Effective Demand

A

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

17
Q

Substitute Good

A

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

18
Q

Complementary Good

A

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

19
Q

Related Goods

A

Products whose demand is influenced by a price change in another

20
Q

Productive Efficiency

A

Whenan economy is utilisingall their resoucres
Occurs anywhere along the PPC

21
Q

Allocative Efficiency

A

meeting the needs of consumers
only appears at one point

22
Q

PPC/ SHORT RUN
What is being used up

A

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

23
Q

PPC/LONG RUN
outward shift

A

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

24
Q

Consumer surplus

A

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

25
Q

producer surplus

A

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

26
Q

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

A

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

27
Q

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

A

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