2.1

• Demand is the quantity of a product consumers are willing and able to buy at a given price.
• The law of demand is: As prices increases quantity demanded decreases. As price decreases quantity demanded increases
• The demand curve is downwards sloping because there is an inverse relationship between price and quantity
• Contraction is a movement up the demand curve where price increases and quantity decreases
• An extension is a movement down the demand curve where price decreases and quantity increases
• A shift in the demand curve is when consumers are demanding more for the same price
• Factors causing a shift in the demand curve

  P - Population

  A - Advertisement

  S - Substitute

  I - income

  F - Fashion/taste

  I - Interest rates

  C - Complements
• 2 types of goods

  1. Normal good - basic goods and superior goods
  2. Inferior goods are necessity
• An increase in income decreases the demand for inferior goods because people can afford luxuries
• Joint demand is when two goods are interdependent.Complement goods are an example of joint demand.
• Composite demand is when the demand for a good has multiple uses.For example oil used for petrol and cooking
• Derived demand is when the demand for one good is a result of demand for another good.For example the demand for math teachers depends on the demand for students who wanna study maths
• Joint supply is when two goods are produced together.For example lamb and wool