Demand

Question 1

What is demand?

Answer 1

Demand refers to the amount demanded by consumers at given prices over a certain period of time.

Question 2

What is the substitution effect?

Answer 2

When there is a rise in price, the consumer (income remains the same) tends to buy more of a relatively lower priced goods and less of a high priced one

Question 3

What is the income effect?

Answer 3

When there is a rise in price, consumers will suffer a fall in their real incomes I.e. the purchasing power of their money incomes falls. With normal goods, the fall n real incomes will;; lead to a fall in quantity demanded.

Question 4

What are factors that cause a shift in the demand curve?

Answer 4

-real incomes

-size or age distribution of the population-increase in size-increase in demand

-Tastes,fashion or preferences

-Price of substitutes or complements

-The amount of advertising or promotion

-Interest rates