theme 1.2.1

Question 1

Demand Definition

Answer 1

Demand is the amount of a product that consumers are willing and able to purchase at a given price.

Question 2

Law of demand

Answer 2

As price decreases, demand increases.
You have money to sufficiently buy what you want.

Question 3

Factors that affect demand

Answer 3

seasonality, advertising and branding, external shocks, tastes, price of substitution, consumer income

Question 4

Drawing demand shifts:

Answer 4

fall in demand = left
increase in demand= right

Question 5

Supply definition

Answer 5

Supply is the amount of a product that suppliers will offer to the market at a given price.

Question 6

The law of supply

Answer 6

as price increases, supply increases

Question 7

Factors that affect supply:

Answer 7

government subsidises, seasonality, external shocks, changes in the cost of production

Question 8

Drawing supply shifts:

Answer 8

increase=right
decrease=left

Question 9

Price elasticity of demand

Answer 9

Price elasticity of demand is the responsiveness of quantity demanded to a change in price.

Question 10

Calculating Ped

Answer 10

%change in qd/% change in price

Question 11

Ped numbers >1,1,0

Answer 11

> 1 = high elastic
1=price elastic
0=price inelastic

Question 12

Factors that influence Ped

Answer 12

-Number of substitutes
-perceived value of brand
-percentage if income
-extent to which the product is considered a necessity

Question 13

Income elasticity of demand

Answer 13

Income elasticity of demand is the responsiveness of demand to a change in incomes.

Question 14

Caclulating yed

Answer 14

%change in QD / %change in incomes

Question 15

Factors that influence yed

Answer 15

• considering if the product is a necessity
  -the price of peoples income
  -whether the product is considered luxury