Unit 1 - Chapter 3

Question 1

Demand

Answer 1

The quantity of a good or services that consumers are willing an able to buy at given prices in a given period of time.

Question 2

Market demand

Answer 2

The quantity of a good or service that all consumers in a market are willing and able to buy.

Question 3

Condition of demand

Answer 3

A determinant of demand, other than the good’s own price, that fixes the position of the demand curve.

Question 4

The main conditions of demand

Answer 4

1) The price of substitute goods
2) The price of complementary goods
3) Income
4) Tastes and preferences
5) Population size (Market size)

Question 5

Decrease in demand

Answer 5

A leftward shift of the demand curve.

Question 6

Increase in demand

Answer 6

A rightward shift of the demand curve.

Question 7

Causes of a RIGHTWARD shift

Answer 7

1) An increase in the price of a substitute good.
2) A fall in the price of a complementary good.
3) And increase in personal disposable income.
4) A successful advertising campaign making people think more favorably about the good.
5) An increase in population.

Question 8

Inferior good

Answer 8

A good for which demand decreases as income increases.

Question 9

Normal good

Answer 9

A good for which demand increases as income rises.

Question 10

Movement along the curve or shift of the curve

Answer 10

• A movement ALONG a demand curve takes place only when the good’s PRICE CHANGES.
• A SHIFT is as a result of a CHANGE in a CONDITION of DEMAND.

Question 11

Giffen good

Answer 11

People by more of an inferior good E.G. potatoes as the price increases because they can no longer afford luxury goods E.G. meat. (Upward sloping demand curve).

Question 12

Speculative demand

Answer 12

People think the price will increase so purchase to sell on. (Upward sloping demand curve).