The Demand Curve

Question 1

What is the difference between demand and effective demand?

Answer 1

Demand is the amount of a good that will be bought at any given price over a period of time, effective demand is how much people are willing to pay supported by the ability to pay at any given price.

Question 2

What is a demand schedule?

Answer 2

Table of the quantity demanded of a good

Question 3

What is the relationship between price and demand?

Answer 3

Inverse relationship, meaning the higher the price the lower the demand.

Question 4

What causes movement along the demand curve?

Answer 4

Price change, e.g. when price falls from 1 to 0.5 you move along the curve from A-B to identify new demand

Question 5

Draw a movement on a demand curve.

Answer 5

Question 6

What causes a shift in the demand curve? (PASIFFIC)

Answer 6

Population
Advertising
Substitutes
Income
Fashion and Trends
Future Expectations
Interest Rates
Complements price

Question 7

Draw a shift in the demand curve left and right

Answer 7

Question 8

What is disposable income?

Answer 8

Income that is available to someone over a period of time to spend

Question 9

What is a normal and inferior good?

Answer 9

A normal good is a good that demand will increase when income increases, and an inferior good is a good which demand will increase when income falls (worse quality)