Microeconomics The Nature of Demand

Question 1

demand

Answer 1

the quantity of a good or service that consumers are willing and able to buy at any possible price in a given period

Question 2

derived demand

Answer 2

demand for a factor of production or a good which derives not from the factor or the good itself, but from the goods it produces

Question 3

joint demand

Answer 3

demand for goods which are interdependent, such that they are demanded together

Question 4

composite demand

Answer 4

demand for a good that has multiple uses

Question 5

competitive demand

Answer 5

demand for goods that are in competition with each other

Question 6

ceteris paribus

Answer 6

a Latin phrase meaning ‘other things being equal’; it is used in economics when we focus on changes in one variable while holding other influences constant

Question 7

Law of demand

Answer 7

a law that states that there is an inverse relationship between quantity demanded and the price of a good or service, ceteris paribus

Question 8

Demand curve

Answer 8

a graph showing how much of a good will be demanded by consumers at any given price

Question 9

Normal good

Answer 9

one where the quantity demanded increases in response to an increase in consumer income

Question 10

Inferior good

Answer 10

one where the quantity demanded decreases in response to an increase in consumer income

Question 11

Substitutes

Answer 11

two goods are said to be substitutes if consumers regard them as alternatives, so the demand for one is likely to rise if the price for the other rises

Question 12

Complements

Answer 12

two goods are said to be compliments if people tend to consume them jointly, so that an increase of the price of one good causes the demand for the other to fall