Demand Flashcards
What is demand?
The quantity of goods and services that buyers wish to purchase at a given price
What is market demand?
The sum of all individual demands for a particular good or service
What is the relationship between price and quantity demanded?
An inverse relationship. As one changed the other moves in the opposite direction. As price rises, quantity falls and vice versa.
What is supply?
Sellers are looking to sell goods and services.
What is demand?
Buyers wants to buy goods and services.
What is demand?
The quantity of goods and services that buyers wish to purchase at any given price or time.
What is market demand?
The sum of all individual demands for a particular good or service
What is the relationship between price and quantity demanded?
An inverse relationship where when one changes the other moves in the opposite direction. As price rises quantity falls and vice Versa.
What is supply?
Sellers are looking to sell goods and services
What is demand?
Buyers want goods and services
What is price as a factor influencing demand?
If the price of a good is more expensive then people will want to buy less of it, but if it is less expensive people will buy more of it. This is an inverse relationship.
What are the changed in price of other goods or services as an influence on demand?
Substitutes and complements
What are substitutes?
Goods that can be consumed in place of one another. If the price of a substitute increases, the demand for the original good increases.
What are complements?
Goods that are usually consumed together. If a price of a complementary good increases, consumers respond by buying less of it and do the demand for the other complementary good will also decrease
What are the changes in consumer incomes for influences on demand?
-Normal/luxury goods
-inferior goods
What are normal/luxury goods?
Positive relationship with income. As income drops so does quantity demanded.
What are inferior goods?
Negative relationship with income. As income drops, demand rises.
What other factors influence demand?
Fashion tastes, advertising and branding, demographics, external shocks, seasonality
What is the relationship between price and supply as an influence for supply?
If the price of a good or service is high than sellers will want to sell more of it, if the price of a good or service is low then sellers will want to sell less of it. So the relationship is a positive one.
What are other influences on supply?
Changes in the cost of production, new technology, indirect taxes, government subsidies, external shocks
What factors affect price elasticity of demand?
Availability of substitutes, brand loyalty, ability to switch, luxury or necessity, proportion of income spent on goods
What does price elasticity of products help businesses make decisions on?
- pricing strategies
- price cuts/ increases
- revenue and profits
What is the impact of a price cut on elastic demand?
If a product is price elastic, it can use price cuts to create greater demand.
