Demand

What is the Theory of Demand?

The quantity consumers are willing and able to buy at a given price in a given period of time.

What happens to quantity when demand goes up?

Quantity goes down.

What happens to quantity when demand goes down?

Quantity goes up.

What does the 'P' in the mnemonic PASIFIC stand for?

Population - More people can mean higher demand for goods and services.

What does the 'A' in the mnemonic PASIFIC represent?

Advertising - Good advertising can make products more appealing and increase demand.

What is the implication of substitutes on demand?

If the price of similar products drops, demand for the original may fall.

How does income affect demand according to the theory?

As people earn more, demand for regular goods goes up, while demand for lower-quality goods may go down.

What role does fashion play in demand?

Popular trends can boost demand for certain products.

What impact do interest rates have on demand?

Higher interest rates can reduce spending on large purchases that need financing.

Explain how complementary goods affect demand.

If demand for one product goes up, demand for related products often increases as well.