| What is a Market? | -Buyers and Sellers exchange Goods and Services
-Price charged is Influences by Demand & Supply Curves
-This can be Illustrated using a Diagram. |
| What does Demand show?
-What about a Demand Curve? | -Quantity of Good/Service that Consumers are Able, and Willing, to Buy at a Given Price and Time
-Demand Curves show show Relationship between Price and Quantity Demanded. At any point, X Quantity would be Bought at Y Price. |
| Why are Demand Curves sloping Downwards? | -Consumers want to Pay the Lowest Price Available [Maximising Behaviour] and so as the Price Falls, more Consumers are Able to Buy More. Opposite happens when Price Rises
-So Therefore when Price is Low, the Quantity Demanded is usually High |
| What does a Shift in the Demand Curve lead to? | -Left means that Quantity Demanded Falls at Any Given Price Level when compared to Original Level. Opposite happens when Shifts to the Right [Higher than OG] |
| What can Cause the Demand to Shift? | -Changes in Taste and Fashion can cause Considerable Shifts in the Demand Curve
-Changes in People’s Real Income can also Affect the Level of Consumption |
| What are Normal, Inferior and Luxury Goods? | -Normal Goods are those that will be Demanded more as Real Income Increases. Therefore leading to Demand Curve shifting Rightwards
-Inferior Goods are those that will be Demanded Less as Real Income Increases, as they may switch to more Expensive Goods instead. This leads to Demand Curve Shifting to the Left
-Luxury Goods are those that are Not Essential and are Associated with those with Higher Wealth and Income, due to Status and Flex. More Equality in Income therefore may seen Demand Curve for Luxury Goods shift to the Left. |
| What is a Substitute Good? [Competitive Demand] | -An Alternative Good to Each other. For Example, Meat and Lamb or Xbox and PS4 are Substitute Goods as they are both Alternatives to each other
-If Price of Xbox Fell, then Xbox will be Demanded More, and Consumers from PlayStation may be Swayed over [Rationality] therefore leading to a Decrease in Demand for PS4. |
| What is a Complementary Good? | -Goods that are Used Together - Joint Demand.
-eg Xbox and Xbox Controllers are in Joint Demand. If price of Xbox Increases, it will lead to Less Quantity Demanded. This will also lead to Xbox Controllers having less Quantity Demanded as well |
| What is Derived Demand? | -Demand for a Good or Factor of Production used to make Another Good.
-For Example, if the Demand of Wooden Fencing Increased, then the Derived Demand for Wood will also Increase |
| What is Composite Demand? | -Goods may have Multiple Uses - Oil
-Demand Curve therefore for Fuel, that leads to more Quantity Demanded [And therefore Supplied] means that less Oil may be Devoted to make Plastics - leading to Less Quantity Demanded as a Result |
