Demand

Question 1

What is the product market?

Answer 1

The market place where final/finished goods or services are sold to consumers

Question 2

Define demand

what is the main factor affecting demand?

Answer 2

The desire for a product backed up by the willingness and ability to pay - this is called Effective Demand.

There are many factors that can affect demand but the main one we focus in is the relationship between the price of a product and its demand

Question 3

What does Ceteris Paribus mean?

Answer 3

Other factors are assumed to be held constant

Question 4

What way will a demand curve slope? (Generally)

Answer 4

Generally correlation will be negative meaning an increase in price will result in a fall in the quantity demanded and vice versa

Question 5

Define the income effect

Answer 5

Expresses the impact of increased purchasing power on consumption. This means consumers will generally spend more if they experience an increase in income, and they may spend less if their income drops. (Ceteris Paribus)

Question 6

Define the substitution effect

Answer 6

Describes how consumption is impacted by changing relative income and prices - A consumer may replace cheaper or moderately priced items with ones that are more expensive when an improvement in finance occurs.

Question 7

Individual demand

Market demand

Answer 7

• Each individual will have their own demand curve for a good or service
• The market demand is the total demand for a good or service found by adding together all individual demands

Question 8

What factors affect demand? 
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Answer 8

• Price
• Income of consumer
• Price of Substitutes
• Price of Compliments
• Seasonal
• Advertising
• Changes in trends/Fashion

Question 9

What causes movement along a demand curve?

Answer 9

Movements along the demand curve are caused by change in price and only change in market price.

Question 10

What causes a shift in demand curves?

Answer 10

Only change in one of the other factors - Non-price factors - that we have held constant Ceteris Paribus can shift a demand curve, not change in price.
For example,
-Change in population size
-Good advertising
-Study results