Demand Analysis — Flashcards

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In economics, demand refers to the quantity of a good or service that consumers are willing and able to purchase at a given price during a specific time period. It requires three elements: desire for …

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The three characteristics of demand are: (1) Desire to buy the product, (2) Financial ability to purchase it, and (3) Willingness to pay the price. All three must be present for demand to exist. For i…

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The demand function is a mathematical expression showing the relationship between the quantity demanded of a good and the factors affecting it. It is written as: Dx = f(Px, P1…Pn, Y, T), where Dx is t…

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The main determinants of demand are: (1) Price of the commodity, (2) Prices of substitute and complementary goods, (3) Consumer’s income, (4) Tastes and preferences, (5) Population size, (6) Technolog…

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There is an inverse relationship between the price of a commodity and its demand, assuming other factors remain constant. When the price rises, demand falls, and when the price falls, demand rises. Th…

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Substitute goods are products that can be used in place of each other, like tea and coffee. If the price of one increases, the demand for the other rises. For example, if coffee becomes expensive, peo…

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Complementary goods are used together, like cars and fuel. If the price of one increases, the demand for both decreases. For example, if fuel prices rise, people may drive less, reducing demand for ca…

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For normal or superior goods, demand increases with income. For inferior goods, demand decreases as income rises. For example, as income grows, people may switch from coarse grains (inferior) to wheat…