Homework

Question 1

Demand

Answer 1

The quantity of a good or service that customers are willing and able to buy at a given price in a given time period.

Question 2

Basic Law of Demand

Answer 2

Demand varies inversely with price, lower prices make products more affordable for consumers.

Question 3

Causes of Changes in Demand

Answer 3

Price
Incomes
Fashion, Tastes and Preferences
Advertising and Branding
External Shocks
Seasonal Factors

Question 4

Demand Curve

Answer 4

The amount of quantity demanded of a product in the market at different price points.

Question 5

Supply

Answer 5

The quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time period.

Question 6

Basic Law of Supply

Answer 6

As the selling point of a product rises, businesses expand supply to the market.

Question 7

Causes of Changes in Market Supply

Answer 7

Costs of Production
External Shocks
New Technology
Taxation and Subsidies

Question 8

Supply Curve

Answer 8

A line or curve that shows the different combinations of quantity supplied and market price.

Question 9

Subsidy

Answer 9

Any form of government support - financial or otherwise - offered to producers and occasionally consumers.

Question 10

Market Equilibrium

Answer 10

When there is a balance between demand and supply in a market.

Question 11

Market Demand

Answer 11

The total quantity demanded for a product in a market by all customers.

Question 12

Market Supply

Answer 12

The total quantity of a product supplied to a market by suppliers.

Question 13

Elasticity

Answer 13

Measures the responsiveness of demand to a change in price/income.

Question 14

PED

Answer 14

Measures the extent to which the quantity of a product demanded is affected by a change in price.

Question 15

PED Calculation

Answer 15

% change in quantity demanded ÷ % change in price

Question 16

Factors that influence PED

Answer 16

Brand Strength
Necessity 
Habit
Availability of Substitutes
Time

Question 17

IED

Answer 17

Measures the extent to which the quantity of a product demanded is affected by a change in income.

Question 18

Inferior Goods

Answer 18

Income rises, demand falls.

Question 19

Normal Good

Answer 19

Income rises, demand rises

Question 20

Limitations of Elasticities

Answer 20

Difficult to get reliable data
Other factors can affect demand
Subject to technological change
Competitors will react