Demand Flashcards
State what Demand is. (2 marks)
Demand is the willingness and ability to purchase a good or service at the given price in a given time.
State what is meant by ‘Law of Demand’. (2 marks)
Normally the quantity demand varies inversely with the price (the quantity demanded and the price move in opposite directions)
State what ‘Individual Demand’ is. (2 marks)
The demand for a good or service by an individual consumer.
State what ‘Market Demand’. (2 marks)
The total demand for a good or service found by adding together all individual demands.
State what a ‘Movement along the demand curve’ is. (2 marks)
When the PRICE changes, leading to a movement up or down the existing demand curve.
State what a ‘Shift of demand curve’ is. (2 marks)
A complete movement of the existing demand curve either outward to the right or inward to the left.
State what is meant by ‘Price elasticity of demand (PED)’. (2 marks)
The responsiveness of quantity demanded to a change in the price of a product.
State what ‘Elastic demand’ is. (2 marks)
When the percentage change in quantity demanded is the greater than the percentage change in price
State what ‘Inelastic demand’ is. (2 marks)
When the percentage change is quantity demanded is less than the percentage change in price.
What are the effects of PED on consumers?
If the product they buy is price inelastic, they will face price rises as consumers need the goods. If the product they buy is price inelastic government can impose high taxes as people still buy it - alcohol.
What are the effects pf PED on producers?
PED allows producers to maximise total revenue. Producers can charge different prices to different groups for the same product.
What is the formula for PED?
% change in quantity
demanded
PED=____________________
% change in price
What does a PED value of 0 mean?
There is no change in quantity as price changes.
What does a PED value between 0 and -1 mean?
The change in quantity is less than the change in price.
What does a PED value of -1 mean?
The change is quantity is equal to the change in price.
What does a PED value between 0 and INFINITE mean?
An infinite amount can be demanded at the given price
What would happen to the demand curve if there was an increase in income?
Rightward shift as consumers buy more at every price.
What would happen to the demand curve if there’s an increase in marketing?
A rightward shift as it persuades consumers to demand more.
What would happen to the demand curve if there was a change in taste fashion?
Rightward shift as if goods are produced accordingly there will be an increase in demand.
What would happen to the demand curve if there are substitutes?
A shift to the right as if people start buying substitutes the demand will increase.
What would happen to the demand curve in an economic situation?
A shift to the left as if we go into a recession then demand falls.
What would happen to the demand curve if there are government policies?
There would be a rightward shift as a subsidy or cut in tax will increase demand.
What would happen to the demand curve based of price expectations?
They will be a shift to the right as if price is expected to rise people will demand more of the product now.
