Demand Flashcards
A contraction of demand
When the price goes up less people want the product
A extension of demand
When the price goes down more people want the product
When is there a movement along the curve?
When there is a change in price, a change in any other factor causes a shift of the curve
Ceterus Paribus
All other things being equal, other facts can affect the solution
What type of relationship is there between price and demand?
Inverse relationship
Which way does a demand curve go?
Demand dives downwards
Demand curves shift when there is a change in..(PLASTICYW)
- Population
- Laws-if law isn’t there then there is less demand e.g driving license
- Advertising-can encourage consumption of the product
- the price of substitute goods
- Trends/ Fashion
- interest rates
- the price of Complementary goods
- (y)Income
- Weather
Give an example of Substitute goods
Xbox and PlayStation
Give an example of complementary goods
Cinemas and popcorn
PlayStation and Fifa
Interest rates
Cost of borrowing and the reward for saving
When interest rates are low you are encouraged to borrow and so demand increases
Diminishing Marginal Utility
As quantity increases the satisfaction decreases
We get the most amount of satisfaction from the first unit we consume.The next one we consume(marginal) gives us slightly less(diminishing) satisfaction. We will maximise our utility until the utility diminishes past the price of the product
Demand
The quantity of a good or service that consumers are willing and able to buy at each and every price at a point in time
Complementary good-
Joint demand
A good whose use is related to the use of an associated or paired good.
Inferior good-competitive demand
An increase in income will cause a fall in demand. You buy more quality goods
Normal good
An increase in income causes an increase in demand
