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Economics Paper 1 > Demand > Flashcards

Demand Flashcards

1
Q

Contraction of demand

A

Due to the rise in prices, the quantity demanded falls

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2
Q

Extension of demand

A

Due to the increase in quantity, there is a fall in price

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3
Q

Factors thar cause demand curve to shift

A 
Population 
Advertising 
Substitutes
Income
Fashion
Interest rates 
Complements
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4
Q

How does population cause the demand curve to shift

A

An increase in the population will cause an increase in demand

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5
Q

How does advertising cause the demand curve to shift

A

Increases consumer awareness

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6
Q

How does substitutes cause the demand curve to shift

A

If the price of substitutes was high then the demand would increase

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7
Q

How would income cause the demand curve to shift

A

If household income falls demand for normal goods will fall too

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8
Q

How does interest rates cause the demand curve to shift

A

If there was high interest rates it would mean that the cost to borrow money would increase so demand falls

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9
Q

How does complements cause the demand curve to shift

A

They are in joint demand so if one of the products demand rises then so will the other

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10
Q

Numerical value for perfectly inelastic

A

0

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11
Q

Numerical value for inelastic demand

A

Less than 1

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12
Q

Numerical value for unit elastic demand

A

1

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13
Q

Numerical value for elastic demand

A

Bigger than 1

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14
Q

Numerical value for perfectly elastic demand

A

Infinity

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15
Q

Why is ped important for a firm

A

Helps makes pricing decisions

Decide what to do to prices to help achieve more total revenue

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16
Q

What must a firm do if a product demand is elastic

A

Decrease prices so more total revenue

17
Q

What must a firm do if its demand is inelastic

A

Increase prices

18
Q

Factors that affect ped

A 
Substitutes 
Percentage of income
Luxury 
Addictive 
Time

Economics Paper 1 (16 decks)

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