Demand and Supply

Question 1

Demand

Answer 1

The amount of good consumers are both willing and able to buy at every given price

Question 2

Ceteris paribus

Answer 2

All things being equal

Question 3

Normal Goods

Answer 3

A rise in income will lead to an increase in demand

Question 4

Inferior Goods

Answer 4

Any good where as income rises less is demand

Question 5

Giffen goods

Answer 5

An inferior good whose demand increases as its price increases

Question 6

Determinants of Demand

Answer 6

1. Income
2. A change in the price of a substitute
3. A change in the price of a complement
4. Redistribution of Income
5. Expectations of future price rises
6. Expectations of future prospects
7. Availability of credit
8. Structure of the population
9. Change in taste

Question 7

Determinants of Supply

Answer 7

1. Changes in the cost of production
2. The profitability of alternative products
3. Nature, ‘random shocks’ and other unpredictable events
4. Change in taxes and subsides
5. Price expectations
6. The profitability of goods in joint supply

Question 8

Equilibrium

Answer 8

When demand equals supply