Demand

Question 1

What are the factors that change market demand?

Answer 1

Size of market;
Income or wealth of market participants;
Preferences of market participants;
Change in prices of other goods and services.

Question 2

Define “market demand”.

Answer 2

The quantity of a commodity that will be demanded by all individuals (and other entities) in the market at various prices during a specified time, ceteris paribus.

Question 3

Define “demand”.

Answer 3

Desire, willingness and ability to acquire a commodity.

Question 4

Describe the substitution effect as it applies to individual demand.

Answer 4

Lower-priced items will be purchased as substitutes for higher-priced items.

Question 5

Describe the income effect as it applies to individual demand.

Answer 5

A given amount of income buys more units at a lower price.

Question 6

Define “individual demand”.

Answer 6

The quantity of a commodity that will be demanded by an individual (or other entity) at various prices during a specified time, ceteris paribus.

Question 7

Distinguish between a change in quantity demanded and a change in demand.

Answer 7

A change in quantity demanded is movement along a given demand curve as a result of change in price only. A change in demand is a shift in a demand curve as a result of changes in variables other than price.

Question 8

Distinguish between a change in quantity demanded and a change in demand.

Answer 8

A change in quantity demanded is movement along a given demand curve as a result of change in price only. A change in demand is a shift in a demand curve as a result of changes in variables other than price.