Demand And Supply

Question 1

Define the term demand

Answer 1

Refers to the quantity of a product that buyers are willing to purchase at a given price

Question 2

Define the term Effective demand

Answer 2

It is a willingness to buy backed up by the ability to pay. Effective demand is real or actual demand. For example, you might say that you would be willing to buy the iPhone but if you don’t have the money to buy it, you don’t have effective demand for that product.

Question 3

Define determine utility

Answer 3

Consumers will try to get as much benefit as satisfaction as possible from their limited resources

Question 4

What is a rational consumer?

Answer 4

This is a person that will choose the cheaper option if offered two similar goods at different prices

Question 5

Define the term demand schedule

Answer 5

Shows the number of goods demanded by consumer at different price levels

Question 6

Define the term demand curve

Answer 6

Is a graph that illustrates the expected demand for a product at various price levels.

Question 7

Name and explain three factors affecting demand

Answer 7

Price of substitute goods: a substitute good is one that can be used instead of the other. If the price of a substitute good is reduced consumers will demand more of the substitute good which made make demand higher for that product e.g. if Pepsi increased prices Coke sales will increase
Fads of fashion: as consumers taste changes so will the demand. Fashionable demands will increase while unfashionable will decrease e.g. increase in PS demand and a decrease in CD demand.
Advertising: products that are heavily advertised may see an increase in demand especially in the short term as consumers want to try new products e.g. magazines

Question 8

Define the term market equilibrium

Answer 8

It is when quantity demand means the quantity supplies at created central price