Demand

Question 1

List 6 determinants of demand

Answer 1

The price of the good
Consumer income
Prices of substitutes
Prices of complements 
Consumer taste and fashion
Other (population changes, advertising, level of competition in a market)

Question 2

What happens when the price of a normal dog increases

Answer 2

Demand decreases

Question 3

What happens when the price of a Veblen good increases

Answer 3

Demand increases

Question 4

What is the snob effect?

Answer 4

When the demand for a good increases as the price increases

Veblen goods

Question 5

What happens to normal goods as income increases?

Answer 5

Demand increases

Question 6

What happens to inferior goods as income increases?

Answer 6

Demand decreases

Question 7

What are Giffen goods?

Answer 7

Inferior goods which increase in demand with an increase in income

Question 8

What are substitutes

Answer 8

Goods and services that act as alternatives to consumers

Question 9

What happens to a good’s demand if a substitute increases the price

Answer 9

Demand increases

Question 10

What are complements?

Answer 10

Good which are bought together

Question 11

What happens when the price of a complement increases

Answer 11

Demand for the good decreases