Demand and Supply

Question 1

Demand

Answer 1

Demand refers to the quantity of a good or service that consumers are willing and able to buy at a given price in a given time period.

Question 2

Law of demand

Answer 2

The law of demand states that the higher the price, the lower the quantity demanded and the lower the price, the higher the quantity demanded.

Question 3

Individual demand

Answer 3

The demand for goods and services by an individual consumer. This shows the amount they would buy at a given price.

Question 4

Market demand

Answer 4

The aggregate demand for the product.

Question 5

Factors affecting demand

Answer 5

1. price
2. price of substitutes
3. price of complements
4. advertisement
5. income of the consumer
6. changes in consumer tastes and fashion
7. climate and seasons
8. size and structure of population

Question 6

Price

Answer 6

If the price of the good increases, the quantity demanded will decrease but if the price of a good decreases, the quantity demanded will increase.

Question 7

Price of substitutes

Answer 7

A substitutes is a good that can be used instead of a particular product. If the price of a product increases, the demand for the substitute will increase.

Question 8

Price of complements

Answer 8

A complement is a good that is used with a product. If the price of the complement increases, the demand for the good will decrease.

Question 9

Advertisement

Answer 9

If an advert is successful, the demand for the good will increase.

Question 10

Income of the consumer

Answer 10

Demand increases as comsumers income increases and decreases as the consumers income decreases.
Disposable income [d.i]= income - tax [income tax]
If income tax increases, your disposable income decreases which means demand increases.

Question 11

Changes in consumers tastes and fashion

Answer 11

If a good becomes more popular [consumer changes taste], the increase of that good will increase but if a good becomes less popular, the demand will decrease.

Question 12

Climates and seasons

Answer 12

Goods for specific seasons. e.g in winter, the demand for winter coats will increase but the demand for summer shorts will decrease.

Question 13

Size of population

Answer 13

If the population in an area increases, there will be an increase in the demand for goods and if the population in an area decreases, there will be a decrease in the demand for goods.

Question 14

supply

Answer 14

supply refers to the amount of goods or services producers / firms are willing and able to produce and sell at a given price over a period of time

Question 15

law of supply

Answer 15

increases in price will lead to an increase in quantity supplied and a decrease in price will lead to a decrease in quantity supplied.

Question 16

factors influencing market supple curve

Answer 16

1. price of the good itself
2. weather/ climatic conditions
3. technical progress
4. cost of production
5. government policy

Question 17

price of the good itself

Answer 17

if the price of the good increases, the quantity supplied will increase but if the price of a good decreases, the quantity supplied will decrease.

Question 18

weather/climatic conditions

Answer 18

good / favourable weather will bring upon a good harvest so supply will increase. however, bad /unfavourable weather will spoil crops and lead to a fall in supply.

Question 19

technical progress

Answer 19

an improvement in technology increases the supply.