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micro y1 > DEMAND AND DEMAND CURVE > Flashcards

DEMAND AND DEMAND CURVE Flashcards

1
Q

DEMAND IS

A

Quantity of g/s consumers are willing and able to buy

at a given price

in a give time period

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2
Q

what does demand have to be for it to exist

A

effecitve

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3
Q

demand being effective means

A

people willing and bale to buy

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4
Q

law of demand has what kind of relationship

A

inverse relationship between QD and Price

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5
Q

as price increases in demand waht happens to QD

A

decreases

and vice versa

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6
Q

on x axis when drawing deamnd curve what is there

A

price

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7
Q

on y axis when drawing demand curve waht is there

A

quantity deamdned

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8
Q

show law of demand on graph

A

axis labelled x - qd y - price

price increase p1 - p2 demand goes from q1 to q2
Price decreases p1 - p3 increase in qd from q1 to q 3

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9
Q

when we increase price what happens to demand curve
3 marks

A

we move up demand curve

get contraction in demand

see reduction in QD

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10
Q

ceteris paribus mean

A

all other factors remaining equal

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11
Q

ceteris paribus allows us to

A

isolate impact of price changes and see impact it has on qd

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12
Q

When we decrease price waht happens to demand curve 3 marks

A

move down deamnd curve

  • extension/expansion of demand

increase in QD

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13
Q

when price changes theres ..

2 marks

A

change in QD by movement along demand curve

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14
Q

what 2 effects can we use to explain downward sloping nature of demand

A

INCOME EFFECT

SUBSTUTION EFFECT

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15
Q

Explain income effect when price increases

5 matks

A

If prices go up

our income cant stretch as far , as purchasing power decreases ,

we are less able to buy ,

i.e Y dont allow us to buy same Q of g/s as before

so demand contracts

vise versa

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16
Q

explain substitution effect when price increases

5 marks

A

Price of g/s increases

we demand less

As price go up other g/s become more price competitive

so we switch demand and consumption towards buying those g/s instead

hence why demand contracts for specific good /s

vice versa

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17
Q

substituiotn and income effect assume

A

ceteris paribus

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18
Q

when we drop ceersi paribus we allow

A

non price factors to affect and shift demand

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19
Q

Increase d - shifts d

A

right

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20
Q

decreased d shift d

A

left

21
Q

as non price factors shift D regardless of price when using grah we

A

shift at same price

22
Q

draw demadn curve shifting becuase of price

5 marks

A

axis labelled y- price x - QD

shifts of price up and down

shift of QD left and right

contraction upward

expansion downward

23
Q

acronmy to rember non price shifters of demand

A

PASIFIC

24
Q

P stands for

A

Population

25
Q

A stands for

A

Advertising

26
Q

S stands for

A

substitute prices

27
Q

i 1stands for

A

income

28
Q

F stands for

A

fashion / trends

29
Q

I 2stands for

A

interest rates

30
Q

C stands for

A

complements

31
Q

increase in population affects on demand ? + draw

A

more demand for certain g/s

shift form D1 - D2 ,

QD increase from Q1 to Q2

32
Q

Advertising affcets

A

willingness to buy somehting

33
Q

good adv affect on demand , bad adv such as bad pr new article

A

shift right from d1 - d2 increasing demand q1 - q2

34
Q

bad adv such as bad news article effect on demand 3 marks

A

demand curve shift left

we become less willing to buy

qd drops d1 -d3

35
Q

how do substitutes affect demand e.g price of pepsi go up 3 marks

A

more people willing and more able to buy coke

shifting demand curve from d1 - d2

and qd right (increases)

vise versa

36
Q

when looking at income what should we distinct between

A

normal and inferior goods

37
Q

when income rises what happens to normla good

A

increase in demand

38
Q

income rise what happens to demand for normal goods 3 marks + graph wise

A

demand shifts right qd increases

more people willing and able ot buy something like fine dining

39
Q

with inferior goods waht ahpoens when incomes increase

A

demand for them decreases

40
Q

whats a beautiful word to describe inferior goods

A

counter cyclical

41
Q

example of inferior good

A

fast food / public transport

42
Q

what happens to demand for fast food when income rise 3 marks

A

demand shifts left

qd decreases

as more able to buy normal and luxury goods and services

43
Q

fashion affects our waht to buy

A

willingness

44
Q

lets say trend towards pop its increases what happens to demand

A

shift right

qd increases

as we demand more of that good AT THE SAME PRICE

45
Q

in ternms of IR what type of goods do consumers borrow money for

A

holidays

houses

cars

46
Q

explain what happens to g/s when IR go down 2 marks

A

cheaper for consumers ot borrow

increasing demand for g/s-

D shift right + qd increases

AND VISE VERSA

47
Q

for complemetary good e.g printer if price of printers go up what happens to demand for printer ink and vice versa

A

DEMAND FOR PRINTER INK DECREASES

DEMAND CURVE SHIFTS LEFT

but if price of printer go down demand for printer ink would increase shifting d1 - d2

48
Q

What is important about complementary goods lets say if price of printer goes up and d for ink goes down - hint price

A

its not price of printer ink that changes but the price of printers that has changed

causing demand curve for ink to shift left

micro y1 (9 decks)

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