1.2.1 demand

Question 1

demand

Answer 1

quantity that customers are willing + able to buy at a given price in a given period of time

Question 2

causes of changes in demand (7)

Answer 2

• price
• incomes
• fashions/tastes/preferences
• advertising/branding
• demographic change
• external shocks
• seasonal factors

Question 3

basic law of demand

Answer 3

demand varies inversely with price
lower price makes products more affordable for consumers

Question 4

seasonal factors

Answer 4

there will be season peaks/troughs for most products
(eg increase in demand for baubles at Xmas time)

Question 5

income effect

Answer 5

• a fall in price, increases the purchasing power of consumers
• allows customers to buy more with a given budget
• demand increases with an increase of incomes

Question 6

substitution effect

Answer 6

• a decrease in the price of a good, makes it relatively cheaper than substitutes
• some customers will switch to good X –> higher demand
• depends if products are close substitutes

Question 7

inward shift (demand curve)

Answer 7

there is less bought at each price level

Question 8

outward shift (demand curve)

Answer 8

shows that there is more of the product being demanded at each price