Non-price Determinants Of Demand (Week 2) Flashcards
What is disposable income
The amount which consumers actually have available to spend
What will an increase in disposable income lead to
An increase in demand at any given price and is shown by an outward shift in the demand curve
What happens to peoples disposable income when tax increases
It will decrease, and lead to a decrease in demand- shown by an inward shift in the demand curve
What is the relationship between wealth and demand
Positive relationship
What is wealth
The stock of assets which has been accumulated over time
What does an increase in wealth result in
An increase in confidence of the consumer and leads to a positive wealth effect, whereby more is demanded and expenditure increases
How is an increase in wealth shown
By an outward shift in the demand curve and vice verse, as their is an increase in demand at any given price
What are complimentary goods
Goods that are bought together
What happens if their is a change in price with one of two complimentary goods
It will affect the demand for another good
What are substitutes
Goods or services with similar uses which are in competition with eachother
What happens if their is a change in price with one of two substitute goods
It will affect the demand of the other good
What can cause an outward shift in the demand curve
Advertising and sponsorship of well known people
What can cause an inwards shift in the demand curve
Poor image and reputation, change in fashion as taste for the good declines
How can social medias affect demand
Social and emotional factors can have a strong influence on demand
What does an outward shift illustrate
An increase in demand
What does an inward shift in demand illustrate
A decrease in demand
What is the relationship between income and demand
Their is a positive relationship.
How else can the relationship between price and quantity demanded be explained
By using the law of diminishing marginal utility
What does a more equal distribution of income result in
A shift to the left for the demand curve of luxury goods & the demand curve for other items to shift to the right. This is because there will be fewer rich luxury people and more normal
What does the introduction of a new product do to the demand curve of substitute goods or complimentary goods
Left shift for substitutes, right shift for complimentary goods
