Economics study notes for demand external level 1
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| What is demand? | show 🗑
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| What is the law of demand? | show 🗑
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| show | Caused only by a change in the price of the good itself. Ceteris Paribus applies
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| show | As the price of the good falls it becomes more affordable and it is also relatively cheaper compared to substitutes
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| show | The horizontal summation of individual demand curves or schedules at each and every price.
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| show | All factors can now change because Ceteris Paribus has been removed.
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| What happens to the curve if demand increases and why? | show 🗑
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| What are the components/factors that shift demand? | show 🗑
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| Describe change in income | show 🗑
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| show | Change in income
If PAYE decreases the households disposable income increases so individuals can now afford to buy more at each and every price.
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| show | Change in income
Goods can be normal or inferior; Normal goods increase income and quantity demanded. Inferior goods increase income and decrease quantity demanded because as income rises, customers can afford to buy better quality goods.
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| Describe change in tastes/fashion | show 🗑
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| show | A substitute can be used in place of another good. If the price of a a substitute falls, there will be decreased demand for the original product. This is because the substitute price is now relatively cheaper.
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| show | Complements are used/consumed together. A decrease in the price of a complement will result in an increase in demand for the original product
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| show | Calculate total spending
Decrease spending on a substitute
Increase demand for a complement
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| Describe the flow on effect of calculate total spending | show 🗑
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| Describe the flow on effect of decrease spending on a substitute | show 🗑
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| Describe the flow on effect of increase demand for a complement | show 🗑
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| What are the flow on effect for a change in demand? | show 🗑
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| Describe the flow on effect for spending on a substitute | show 🗑
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| Describe the flow on effect for spending on a complement | show 🗑
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| Describe the flow on effect for flow on behaviour | show 🗑
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