Unit 2.1: Demand

Question 1

Demand

Answer 1

The quantity of a good/service that consumers are willing and able to buy at various prices, over a period of time, ceteris paribus

Question 2

Law of Demand

Answer 2

The law of demand states there is a negative casual relationship between the price and quantity demanded:

“As the price of a product falls, the quantity demanded of the product will increase, ceteris paribus.”

Question 3

Non-price determinants of demand

Answer 3

TRIBES
- Tastes
- Related goods’ price
- Income
- Buyers
- Expectations of future prices
- Special circumstances

Question 4

Substitute goods

Answer 4

Goods that satisfy a similar need

In general, the price of X and demand for Y will change in the same direction

Question 5

Complementary goods

Answer 5

Goods that tend to be used together

In general, the price of X and demand for Y will change in opposite directions

Question 6

Normal good

Answer 6

Goods where the demand increases as a result of an increase in income

Question 7

Inferior good

Answer 7

Good where the demand falls as a result of an increase in income

Question 8

Market

Answer 8

Where buyers and sellers trade goods and services
- Product markets
- Resource markets