Demand

Question	Answer
Explain the concepts of scarcity, choice and opportunity cost and how they come into play when consumer choices are made	Consumers have limited resources and means (money, time, skills, etc) and because of this, we are unable to purchase all of our wants which creates scarcity. So, because of scarcity, consumers must make choices regarding what to spend their resources on. After having made a consumer choice there will always be an opportunity cost. This is the next best good or service which is being given up.
What are resources?	Resources are the things we have available to help us obtain our needs and wants
What are means?	Means are our personal resources of time, skills, and money including those of our family All means are limited
Explain Scarcity	The concept of having unlimited wants and limited means
What are needs and wants	Needs: - Those things we must have to survive eg food and water Wants: - Those things we would like but can survive without
Explain Conflict	-Conflict is caused when one or more consumers have contradicting values or opinions which can cause disagreements or arguments regarding consumer choice -When there is conflict a compromise must be made
What are values and how do they affect consumer choice	-Values are the ideas and beliefs that a person, group or society consider to be important -In economics, they are a non-price factor which affects consumer choices and can cause conflict Eg. Fair dealing, honesty, integrity
List some of the factors which can affect values	-Parents -Upbringing -Culture -Education -Religion -Peers -Media
What are consumer choices	Economic decisions a consumer makes as a result of scarcity which incurs an opportunity cost Consumer choices are influenced by the means a person has and their values
What is demand	Demand corresponds with the quantity a person is both willing and able to buy at a range of prices
What are flow on effects	Flow on effects are the change and adaptations made as a result of an earlier change in price of a good or the demand they have for a good or service
What does TALL stand for and when can you use this acronym	T-Title with a time frame A-Axis L-Labels L-Line This acronym help identify the required components of a demand curve and schedule
State the law of demand	As the price increases the quantity demanded will decrease, vice versa, ceteris paribus
What causes a change in demand	A change in price will cause a change in demand creating a shift along the demand curve
How do non-price factors affect demand	When non-price factors change, there will be a shift is demand which causes a shift of the entire demand curve
List some non-price factors	-Tastes and preferences -Income -Price of substitute good -Price of a complementary good
What are normal goods?	Necessities-- Goods which provide the items we need -Luxuries--The type of items which are our wants -Normal goods are those goods for which demand will increase as does a person's income
What are inferior goods?	Inferior goods are goods for which demand falls as income increases These types of goods typically are of poorer quality As income rises consumers switch to better quality goods and normal goods
What are savings	Like spending on luxuries, savings tend to increase as household income rises as they have money left over from purchasing necessities and luxuries
Explain income tax and disposable income	-Income is what you get from working -tax is then subtracted from that sum -leaving the disposable income

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	Created by Tilly Surrey almost 7 years ago