Demand

Question 1

What is demand

Answer 1

The quantity of goods or services that will be bought over a period of time at any given price

Question 2

Why would demand for a good change

Answer 2

It will rise or fall if there are any changes in the conditions of demand such as incomes, price of other goods, tastes and the size of the population

Question 3

How is a change in price shown in the demand curve

Answer 3

Shown by a movement along the demand curve

Question 4

Why does a shift in the demand curve appear

Answer 4

A change in any other variable affecting demand, such as income is shown by a shift in the demand curve

Question 5

Where can a market exist

Answer 5

Wherever there are buyers and sellers of a particular good. Buyers demand goods from the market whilst sellers supply goods to the market

Question 6

What’s demand

Answer 6

Demand is the quantity of goods or services that will be bought at any given price over a period of time

Question 7

What does a demand curve show

Answer 7

Shows the quantity that is demanded at any given price - when price changes there is said to be movement along the curve

It’s downward sloping from left to right

Question 8

What’s extension of demand

Answer 8

When the quantity demanded rises

Question 9

What’s contraction of demand

Answer 9

When the quantity demanded falls

Question 10

What’s effective demand

Answer 10

The demand curve shows effective demand - how much would be bought at any price and not how much would like to buy if they had unlimited resources

Question 11

What’s the link between demand and price

Answer 11

In almost all cases , rises in price lead to falls in quantity demanded

Always an inverse relationship between price and quantity demanded

Question 12

What are conditions of demand

Answer 12

Other factors apart from price that can cause demand for a product to change - changes in these conditions cause a shift in the demand curve either to the left or to the right

Question 13

What is the effect of income on demand

Answer 13

Income is a condition of demand

Demand for a normal good rises when income rises

If income increase the demand curve tends to move to the right as at any given price - more will be demanded at the new higher level of income

Question 14

What change would occur from a change in quantity demanded

Answer 14

A change in quantity demanded would result from a change in price and would be shown by a movement along the curve

Question 15

How is a demand curve drawn

Answer 15

As straight lines - for convenience

The shifts in demand curves are drawn as parallel shifts - done for convenience , unlikely a shift would cause a precisely parallel shift in its demand curve

Price always on vertical axis, quantity on horizontal

Question 16

Tell me about the price of other goods as a condition of demand

Answer 16

Change in price for other goods might affect demand for another eg. Less potatoes might mean higher demand for pasta

The items must be correlated though - like carrots won’t affect tennis racket demand will it lmao

Question 17

Tell be about changes in the population as a condition of demand

Answer 17

An increase in population is likely to increase demand for goods

Question 18

Tell me about changes in fashion as a condition of demand

Answer 18

The demand for items such as wigs or flared trousers or white kitchen units changes as these terms do in or out of fashion

Question 19

Tell me about changes in legislation as a condition of demand

Answer 19

The demand for seat belts, anti pollution equipment or cigarettes has been affected by changes in government legislation

Question 20

Tell me about advertising as a condition Of demand

Answer 20

A very powerful influence on consumer demand that seeks to influence consumer choice

Question 21

The demand curve shows …..

Answer 21

The value to the buyer of each item bought

Question 22

What’s law of diminishing marginal utility

Answer 22

The value , or utility attached to consuming the last product bought falls as more units are consumed over a given period of time

Eventually if he have too much of something we will experience negative marginal utility

Question 23

What’s the paradox in value

Answer 23

Why there’s such a high price for stuff like demands which we don’t need but necessities such as water - price is very low

Question 24

How does the law of diminishing marginal utility explain the paradox of value

Answer 24

If there are few goods available to buy - consumers are prepared to pay a high price for them BECUASE their marginal Utility is high

If goods are plentiful - then consumers are only prepared to pay a low price BECUASE the last one consumed has low marginal utility

Question 25

How does the law of diminishing marginal utility explain why the demand curve is downward sloping

Answer 25

The higher the quantity bought, the lower the marginal utility (the utility from the last one) derived from consuming the product

So buyers will only pay Low prices for relatively high amounts purchased - but they will pay higher prices if the quantity available for sale is lower

Question 26

What’s consumer surplus

Answer 26

This is the difference between the value to buyer and what they will actually pay

Question 27

What are the 2 main housing markets in the uk

Answer 27

Renting and buying a house

When renting - tenants rent properties from landlords

In the owner occupied market, people buy a property to live in it

Question 28

Tell me about how price affects the demand for housing

Answer 28

The higher the price of a property, either it’s price or rent, the lower will be the quantity demanded

Long term trend for house prices and rent has been upwards but there have been periods of sharp falls

Higher prices tend to disadvantage house buyers and those looking for rented accommodation- they limit what they can afford

Question 29

How do interest rates affect demand for housing

Answer 29

Most houses are bought partly with mortgages - higher the interest, higher the monthly repayments, higher interest rates tend to reduce quantity demanded of buying a house

Question 30

How do incomes affect the demand for housing

Answer 30

Over the long term, rising incomes have increased demand for houses, shifting the demand curve to the right

Question 31

Tell me about population affecting the demand for housing

Answer 31

The number of households in growing even faster

With an ageing population, the long term trend has been for more single pensioner households and few households with parents and children

Question 32

How do other actors affect the demand for housin

Answer 32

One very damaging factor has been speculation
Some house buyers purchase property mainly BECUASE they hope they will be able to sell it later at profit

Prices have risen fast only to crash later as in the first decade of the 21 century - this can leave some of those who bought At the height of the bubble with negative equity - means they owe more money on the mortgage they used to buy a property than its current sale value

Question 33

There’s a data response question on pg 41 and

Answer 33

Ylu need to add key terms to key terms deck