demand

Created by

Eva Park

Cards (20)

What is demand  
The quantity of a good or service that a consumer is willing and able to buy at each and every price
What can be used to show demand
A demand curve
What causes a movement/shift on a demand curve
A change in price
What is it called on a demand curve when price increases and quantity decreases
Contraction
What is it caller on a demand curve when price decreases and quantity increases
Extension
What is the relationship between price and quantity
Inverse relationship
What is the income effect 
A fall in the price which increases the real purchasing power of consumers as incomes are fixed
What does the income effect allow 
Allows more people to buy ejth a given budget
What is the substitution effect 
A fall in the price of good X can make it cheaper compared to substitutes meaning some consumers may switch to X leading to a higher demand
What does PASIFIC stand for
Population, advertising, substitute, income, fashion, interest rate, complimentary goods
What is derived demand
The demand for a factor or production used to produce another good or service
What is composite demand 
Exists where goods have more then one use - an increase in the demand for one product leads to a fall in supply of the other e.g. corn can be used for animal feed and food
What is joint demand
Demand for related (complimentary) goods
What is competitive demand  
One products demand is directly and negatively related to the market
What is joint supply 
Where an increase or decrease in the supply of one good leads to an increase or decrease in supply of a by-product such as how cows can be Used for milk and beef
When are inferior goods in demand
When income is decreased
When are normal goods in demand 
When income is increased
What are inferior good examples
Own store brands, public transportation
why is the slope on a demand curve sloping down
the law of diminishing returns, the income effect and the substitute effect
why can a demand curve shift
due to non price determinants (pasific)