Theme 1.2.2/1.2.8 Demand (unit 8) Flashcards
What is the definition of Demand?
Demand is the quantity of goods or services that will be bought at any given price over a period of time.
What is the demand curve?
A demand curve is the line/ curve on a price/ quantity diagram which shows the level of effective demand at any given price.
What would indicate an extension on demand?
If the quantity demanded of a product increases because there is a fall in price. Shown by a shift down the curve.
What would indicate a contraction of demand?
If the quantity demanded fell as a result of the price increasing. Shown by a shift up the curve.
What is effective demand?
It is the same concept a demand but its important to remember that the curve shows how much would be bought at the current level of FoP and needs and wants and not if there where infinite resources. I.E how much a consumer can afford to buy and would buy.
What are conditions of demand?
Conditions are other factors, apart from price, that lead to changes in demanded and are often associated woth shifts in demand.
What will be the effect of a national rise in wages?
There will be an increase in quantity demanded of goods
How would the price of other goods effect the demand of another?
If say the price of a staple food item where to increase people would shift to an alternative resulting in a higher demand for the new staple food resulting a shift to the right in demand.
What other factors can effect the demand of goods other than pride and income?
- Changes in population
- Changes in fashion
- Changes in legislation
- Advertising of a product
What is the ‘law of diminishing utility?
It is where the value or utility that a consumer gains falls as they consume more. For example the first biscuit will be more enjoyable the the sixth meaning the price will need to be dropped or maintained to keep demand where it once was.
Wha is Consumer surplus?
Photo if possible.
It is the difference between how much buyers would pay for a good and what they actually pay.
