Demand 1.2.1

Question 1

What is Demand?

Answer 1

Demand for a good/service is the quantity that customers are willing and able to buy at a given price in a given period of time

Question 2

What is the law of demand?

Answer 2

C’eteris paribus: there is an inverse relationship between the quantity demanded and the price of a good

• If the price of a good/service rises, there will be a decrease in demand (contraction)
• As the price of a good/service falls, there is an increase in demand (extension)

Question 3

What are the factors that can lead to a change in demand?

Answer 3

• Price of a product/service
• Advertising and branding
• Price of substitute goods
• Price of complimentary goods
• Income levels of consumers
• Trends and preferences
• Seasonality
• Demographics
• External shocks

Question 4

What does price do on the demand curve?

Answer 4

Price causes a movement

Question 5

What do the rest of the factors do on a demand curve?

Answer 5

The rest cause a shift

Question 6

Describe a shift on a demand curve

Answer 6

An increase in demand is shown by shift to the right

A decrease in demand is shown by shift to the left