Quantity demand

• What does a demand curve show?

  The relationship between price and quantity demanded
• How does a demand curve represent quantity demanded?

  It shows the quantity demanded for a good at any given price level over a period of time
• What happens to quantity demanded as prices fall?

  Quantity demanded rises
• What happens to quantity demanded as prices rise?

  Quantity demanded falls
• Can the quantity demanded graph be shifted?

  No, it cannot be shifted; price changes cause movement along the curve
• What affects demand for different types of goods?

  Changes to people's real income
• What happens to the demand for normal goods when real income increases?

  Demand for normal goods increases
• What effect does an increase in real income have on the demand curve for normal goods?

  It shifts the demand curve to the right
• What happens to the demand for inferior goods when real income increases?

  Demand for inferior goods decreases
• What effect does an increase in real income have on the demand curve for inferior goods?

  It shifts the demand curve to the left
• How does a more equal distribution of income affect the demand for luxury goods?

  It may cause the demand curve for luxury goods to shift to the left
• How can changes in one market affect demand in other markets?

  Some markets are interrelated, such as the price of petrol affecting car sales
• What are substitute goods?

  Goods that are alternatives to each other
• What happens to the demand for a substitute good when the price of another good increases?

  The demand for the substitute good increases
• What are complementary goods?

  Goods that are often used together
• What happens to the demand for complementary goods when the price of one good increases?

  The demand for the complementary good decreases
• What effect does the introduction of a new product have on the demand curve for substitute goods?

  It may cause the demand curve to shift to the left for substitute goods
• What is derived demand?

  The demand for a good or factor of production used in making another good or service
• How does an increase in demand for fencing affect the demand for wood?

  It leads to an increase in derived demand for wood
• What is composite demand?

  Demand for goods that have more than one use
• How does a change in demand for fuel affect the demand for plastics?

  A change in demand for fuel could lead to a change in demand for plastics
• How is demand defined?

  The amount of a good or service that consumers are willing and able to buy at any given price level
• What does "ceteris paribus" mean in economics?

  All other factors remain the same
• What are the determinants of demand?

  • The price of the good
  • Consumer income
  • Price of other goods
  • Consumer taste and fashion
  • Other factors
• What happens to demand for a normal good if its price increases?

  Demand for that good decreases
• What happens to demand for a normal good if its price decreases?

  Demand for that good increases
• Who identified the snob effect in economics?

  Thorstein Veblen
• What is the snob effect?

  People pay more for certain products as their price increases due to increased status
• What happens to demand for normal goods as consumer income increases?

  Demand for normal goods increases
• What happens to demand for inferior goods as consumer income increases?

  Demand for inferior goods decreases
• What did Sir Robert Giffen identify about certain inferior goods?

  Demand rose as consumer incomes decreased
• How did Giffen's observations relate to the price of bread?

  A rise in the price of bread led poor families to spend more on bread
• What is the relationship between normal goods and consumer income?

  Demand for normal goods rises as consumer incomes rise
• What is the relationship between inferior goods and consumer income?

  Demand for inferior goods falls as consumer incomes rise
• What is the effect of substitute products on demand?

  Substitute products create competition, affecting demand
• What happens to the demand for similar products when the price of Coca-Cola increases?

  Demand for similar products like Pepsi increases
• What is a complementary product?

  A product that is bought alongside another good or service
• What happens to the demand for fish and chips if the price of fish increases?

  Demand for fish and chips decreases
• What are sub-markets?

  Smaller markets that make up a larger market
• What is a market in economic terms?

  • A market is where goods and services are bought and sold
  • It is anywhere buyers and sellers can exchange goods or services