T4 Demand

Question 1

What is demand?

Answer 1

Demand for a good or service is the quantity that customers are willing and able to buy at a given price in a given period of time

Question 2

How does higher and lower prices affect demand?

Answer 2

Higher price = less quantity (a higher price leads to a reduction of quantity demanded)
Lower price = higher quantity (a lower price leads to an increase in quantity demanded)
(Price and quantity demanded is inversely proportional)

Question 3

What are factors leading to a change in demand?

Answer 3

• change in consumer income
  -the change in price of a complimentary good is likely to shift the demand curve depending on which way price moved

Question 4

How does income affect demand?

Answer 4

• a fall in price increases the purchasing power of customers
• this allows customers to buy more
  Demands tend to increase with incomes

Question 5

What demographics influence demand.

Answer 5

• age ( uk has a grey culture, high demand for old people homes)
• geographical distribution
• ethnic groups (products in supermarkets)
• external shocks ( factors beyond control of business, with competition demand is likely to fall)
• environmental factors (seasonality, skiing,Easter)

Question 6

How does advertising and branding influence changes in demand?

Answer 6

• A business that runs an advertising campaign should see an increase in demand (demand curve will move to right).
• Investing heavily in production and advertising will increase demand