2.3

Demand

9 flashcards to master Demand

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Definition Flip

Answer Flip

Key Concept Flip

Explain the 'law of demand'.

Answer Flip

The law of demand states that as the price of a good or service increases, the quantity demanded decreases, and vice versa, ceteris paribus. This inverse relationship is depicted by a downward-sloping demand curve.

Example: if the price of oranges rises from $1 to $2 per orange, consumers may buy fewer oranges, switching to cheaper fruits.
Key Concept Flip

What is the difference between a 'movement along' and a 'shift' of the demand curve?

Answer Flip

A 'movement along' the demand curve occurs when the price of the good itself changes, affecting quantity demanded.

Example: a rise in the price of candy bars from $1 to $1.50 might decrease the quantity demanded. A 'shift' occurs when other determinants of demand change, such as consumer income or tastes, causing the entire curve to move.
Key Concept Flip

Explain how an increase in consumer income typically affects the demand for a normal good.

Answer Flip

For a normal good, an increase in consumer income leads to an increase in demand, shifting the demand curve to the right. Consumers have more disposable income.

Example: if consumer incomes rise by 10%, demand for new cars (a normal good) may increase by 5%, all else being equal.
Definition Flip

Answer Flip

Definition Flip

Define 'complementary goods' and give an example.

Answer Flip

Complementary goods are goods that are often consumed together.

Example: cars and gasoline are complements; if the price of gasoline increases, the demand for cars may decrease.
Key Concept Flip

How does a change in consumer tastes or preferences affect the demand curve?

Answer Flip

A favorable change in consumer tastes or preferences towards a good will increase demand, shifting the demand curve to the right. Conversely, an unfavorable change will decrease demand, shifting the curve to the left.

Key Concept Flip

Explain how an increase in population size may affect the market demand for housing.

Answer Flip

An increase in population size typically leads to a higher demand for housing, shifting the demand curve to the right. This is because more individuals require accommodation.

Example: rapid population growth in a city like Lagos, Nigeria, has significantly increased the demand for housing, driving up prices and prompting construction of new residential areas.
Definition Flip

What is 'quantity demanded'?

Answer Flip

Quantity demanded refers to the specific amount of a good or service that consumers are willing and able to purchase at a specific price during a specific time period. It is a point on the demand curve.

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2.2 The role of markets 2.4 Supply

Key Questions: Demand

Define 'complementary goods' and give an example.

Complementary goods are goods that are often consumed together.

Example: cars and gasoline are complements; if the price of gasoline increases, the demand for cars may decrease.
What is 'quantity demanded'?

Quantity demanded refers to the specific amount of a good or service that consumers are willing and able to purchase at a specific price during a specific time period. It is a point on the demand curve.

About Demand (2.3)

These 9 flashcards cover everything you need to know about Demand for your Cambridge IGCSE Economics (0455) exam. Each card is designed based on the official syllabus requirements.

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