The determinants of the demand for goods and services

Question 1

define demand

Answer 1

when you are both willing and able to buy it/ something

Question 1

why does the demand curve slap down?

Answer 1

There is an inverse (opposite) relationship between price and quantity.
- Quantity demanded increases when prices decreases
- when the price increases quantity demanded decreases

Question 2

define contraction in demand

Answer 2

When price goes up, quantity demanded decreases, moving us along the curve

Question 3

define extension in demand

Answer 3

When price goes down, Quantity demanded increases, moving us along the demand curve

Question 4

what happens to the demand curve when the price changes on the demand curve?

Answer 4

we’ll see an extension or contraction in demand

Question 5

what happens to the demand curve when something other than price changes?

Answer 5

the entire demand curve will shift

Question 6

stat another word for shifts in demand

Answer 6

conditions of demand

Question 7

state the 8 factors for a shift in the demand curve?

Answer 7

• Advertising
• fashion and trends
• Population
• age structure
• Seasons
• Income
• substitute goods
• Complementary goods

Question 8

shifting demand: Advertising

Answer 8

• will increase consumer loyalty to the good
• at the same price, more of the G/S is demanded
• QD increases, more will be demanded by consumers than before = outwards shift in the demand curve

Question 9

shifting demand: Population

Answer 9

• If population size were to decrease, demand will decrease as there will be fewer people to demand a G/S = inward shift in demand
• If population size were to increase, demand will increase as there will be more people to demand a G/S = outward shift in means

Question 10

shifting demand: age structure

Answer 10

• People are living longer = more elderly people, this may increase demand for goods such a wheelchairs so that the elderly people can get around
• the number of teenagers are decreasing as people are choosing to have fewer children, so demand for goods such a s video games will decrease - shifting demand inward

Question 11

shifting demand: fashion and trends

Answer 11

If people’s fashion and taste change and a product are becoming outdated, demand will decrease because fewer people are now willing to buy the product

Question 12

shifting demand: Seasons

Answer 12

As seasons change, demand for particular goods will also change:
- in winter demand for ski’s increase and In Fall demand for ski’s decrease
- Summer, demand for ice creams will increase

Question 13

shifting demand: income

Answer 13

depends on whether the good is a normal or inferior good.
- if a normal good, any good customers will buy more of if they had a higher income
- if inferior good, any good consumers will buy less of if they had a higher income

Question 14

shifting demand: substitute goods

Answer 14

substitutes replace another good
- when the price of another good goes down, demand for the original good decrease, increasing demand for the other good
- When the price of another good goes up, the demand for the original good increases, decreasing demand for the other good

Question 15

shifting demand: Complementary goods

Answer 15

complementary gods are goods which are bought and used together
- If the price of one complementary good decreases, the demand for the other good will increase
- if the price of one complementry good goes up, the demand for the other good would decrease

Question 16

define inferior good

Answer 16

• inferior good is a good for which demand decreases when incomes rise + Demand increases when income fall
  (EXAMPLE - SAINSBURY’S BRANDED BEANS)

Question 17

define normal good

Answer 17

normal good is a good for which - demand increases when income rises + Demand decreases when incomes fall (EXAMPLE - LUXURY GOOD)