Demand

Overview

What demand is, substitute and complementary goods, income, tastes, advertising, branding and demographics as influences on demand, external shocks and seasonality, and the difference between a movement along and a shift of the demand curve.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   Define demand in economic terms.

   Model answer

   Demand is the quantity of a good or service that consumers are willing and able to purchase at a given price in a given time period.

2. 2

   What happens to demand for a product if the price of a substitute good rises?

   Model answer

   Demand for the original product increases, as consumers switch away from the now more expensive substitute.

3. 3

   What are substitute goods?

   Model answer

   Substitute goods are products that can be used in place of one another to satisfy the same consumer need.

4. 4

   If the price of a complementary good rises, what happens to demand for the related product?

   Model answer

   Demand for the related product decreases.

5. 5

   Define complementary goods.

   Model answer

   Complementary goods are products that are consumed together, where purchase of one increases demand for the other.

6. 6

   How does an increase in consumer incomes typically affect demand for normal goods?

   Model answer

   An increase in consumer incomes generally leads to an increase in demand for normal goods.

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