Chap3- Demand

• What is the definition of demand in economics?

  Demand is the quantity of a good or service that consumers are willing and able to buy given its price, the price of other goods, and consumers' incomes and preferences.
• What factors influence an individual's demand for a product?

  Factors include personal enjoyment, price, affordability, and advertising.
• What are the four main factors that determine demand for a good?

  • Price of the good
  • Consumer income
  • Price of other goods
  • Consumer preferences
• What is joint demand?

  Joint demand is the demand for goods that are interdependent and are demanded together.
• What is composite demand?

  Composite demand is the demand for a good that has multiple uses.
• What is competitive demand?

  Competitive demand is the demand for goods that are in competition with each other.
• How can market demand be analyzed?

  Market demand can be analyzed in terms of the factors that influence all potential buyers of a good or service.
• What is the law of demand?

  The law of demand states there is an inverse relationship between quantity demanded and the price of a good or service, ceteris paribus.
• What does the term ceteris paribus mean?

  Ceteris paribus is a Latin phrase meaning 'all other things being equal'.
• What happens to the demand curve when non-price factors change?

  A change in non-price factors causes a shift of the whole demand curve.
• What is consumer surplus?

  Consumer surplus is the value that consumers gain from consuming a good or service over and above the price paid.
• How does an increase in the price of a good affect consumer surplus?

  An increase in the price of a good reduces the overall size of consumer surplus.
• What are the characteristics of normal and inferior goods?

  • Normal good: Quantity demanded increases with an increase in consumer incomes.
  • Inferior good: Quantity demanded decreases with an increase in consumer incomes.
• What is the relationship between substitutes and demand?

  Substitutes are goods that consumers regard as alternatives, so demand for one rises if the price of the other rises.
• What is the relationship between complements and demand?

  Complements are goods consumed jointly, so an increase in the price of one causes demand for the other to fall.
• How can consumer preferences influence demand?

  Consumer preferences can influence demand based on personal inclinations, advertising, and social trends.
• How do expectations about future prices affect demand?

  Expectations about future prices can lead consumers to delay purchases if they anticipate price reductions.
• What is the significance of the demand curve in economics?

  The demand curve shows how much of a good will be demanded by consumers at any given price.
• How does the concept of consumer surplus relate to societal welfare?

  Consumer surplus represents the welfare that society gains from consuming a good over and above the price paid for it.
• What is the effect of a snob effect on demand?

  A snob effect may lead to an upward-sloping demand curve for certain goods valued more highly due to their high price.
• What is a Giffen good?

  A Giffen good is a type of inferior good for which demand increases as the price rises, contrary to the law of demand.
• What is the relationship between consumer incomes and the demand for normal goods?

  For normal goods, an increase in consumer incomes leads to an increase in the quantity demanded at any given price.
• How does the demand for inferior goods change with consumer incomes?

  For inferior goods, an increase in consumer incomes leads to a decrease in the quantity demanded.
• What happens to demand when the price of a substitute good increases?

  The demand for a substitute good is likely to rise if the price of the other good rises.
• What happens to demand when the price of a complementary good increases?

  An increase in the price of a complementary good causes demand for the other good to fall.
• How can advertising influence consumer preferences?

  Advertising can influence consumer preferences by shaping perceptions and increasing awareness of products.
• How can social trends influence consumer demand?

  Social trends can influence consumer demand by creating fads or changing perceptions about products.
• What is the impact of a sudden surge in popularity on demand?

  A sudden surge in popularity can lead to an increase in demand for a good.
• How does the time element affect demand for certain goods?

  The time element can affect demand as consumption may be spread over long periods or seen as an investment.
• How do expectations about future price changes influence consumer behavior?

  Expectations about future price changes can lead consumers to delay purchases if they anticipate price reductions.
• What is the significance of the demand curve in relation to consumer surplus?

  The demand curve can be interpreted as the benefit to be derived from consuming a good, which relates to consumer surplus.
• How does the price charged for a good relate to consumer surplus?

  The price charged for a good affects the size of consumer surplus; an increase in price reduces consumer surplus.
• What is the relationship between consumer surplus and societal welfare?

  Consumer surplus represents the welfare that society gains from consuming a good over and above the price paid for it.
• How does the demand for a good change when consumer preferences shift?

  A shift in consumer preferences can lead to an increase or decrease in demand for a good.
• What is the effect of advertising on consumer preferences?

  Advertising can shape consumer preferences and influence their purchasing decisions.
• How can a sudden collapse in demand occur?

  A sudden collapse in demand can occur due to negative changes in consumer preferences or external factors.
• How does the concept of consumer surplus relate to the demand curve?

  The demand curve reflects the maximum price consumers are willing to pay, indicating consumer surplus at various quantities.
• What is the impact of a price increase on consumer surplus?

  A price increase typically reduces consumer surplus as consumers pay more for the same quantity of goods.
• How does the demand for a good relate to its characteristics?

  The nature of demand for a product may depend upon its characteristics, such as whether it is a joint, composite, or competitive demand.
• What is the significance of the demand curve in economic analysis?

  The demand curve is significant as it visually represents the relationship between price and quantity demanded.