DEMAND - DEFINITIONS

Question 1

Define ‘Demand’.

Answer 1

Demand refers to the quantity of a good or service that a consumer is willing unable to pay at a given price over a given period of time.

Question 2

Define ‘Quantity Demanded’.

Answer 2

Quantity demanded refers to the exact amount of a good service that buyers are willing to purchase at a specific price.

Question 3

Define ‘Law of Demand’.

Answer 3

Law of demand states that as the price of a good increases, the quantity demanded decreases and vice versa in Ceterus Paribus.

Question 4

Define ‘Demand Curve’.

Answer 4

Demand curve is a graph, showing the relationship between the price of a good and the quantity demanded. It is usually downward sloping.

Question 5

Define ‘Movement along the Demand Curve’.

Answer 5

Movement along the demand curve refers to a change in quantity demanded due to a change in the price of the good itself.

Extension of demand = lower price
Contraction of demand = higher price

Question 6

Define ‘Shift in the Demand Curve’.

Answer 6

Shift in demand refers to a change due to non-price factors such as income taste population, causing the entire move, right (increase in demand) or left (decrease in demand).

Question 7

What are the ‘Conditions of Demand’ (Non-price determinants)?

Answer 7

Conditions of demand referred to the factors that shift the demand curve, namely income levels, taste and preferences, price of substitutes, price of compliments, population size, advertising, and seasonal factors.

Question 8

Define ‘Substitute Goods’.

Answer 8

Substitute goods refer to goods that can replace each other. A rise in the price of one increases the demand for other.

Question 9

Define ‘Complimentary Goods’.

Answer 9

Complimentary goods referred to goods that are used together for the price of one increases the demand for the other.

Question 10

Define ‘Inferior Goods’.

Answer 10

Inferior goods refer to goods for which demand falls as consumer income rises.

Question 11

Define ‘Normal Goods’.

Answer 11

Normal goods refer to goods for which demand rises as consumer income rises.