REVIEW 2.3
DEMAND

DEMAND – the quantity buyers are willing and able to buy at a given price
in a given time.

EFFECTIVE DEMAND- For demand to be effective a consumer must be both
willing and able to buy the good or service

CONTRACTION OF DEMAND- the fall in the quantity demanded due to a
rise in price.

EXTENSION OF DEMAND – the increase in quantity demanded due to a fall
in price.
A-C = Contraction – Rise in price.
A-B = Extension – Fall in price.
EXAM QUESTIONS – 2010 , Q2 (3)
REVIEW 2.4
INCREASE/DECREASE IN DEMAND
D1 – D3 = INCREASE
D1 – D2= DECREASE

Inferior Good – Goods for which the demand falls when income rises.

PASIFIC

Population – Increase in population will cause an increase in demand. Right shift.
Also includes the composition (age)

Advertising – Good advertising will cause an increase in demand. Right shift

Substitutes (price of)- If the price of substitutes goes down it’s a fall in demand.
Left shift.

Income – If income increases demand increases. Right shift (normal goods) Left
shift(inferior goods)

Fashion- In fashion- increase in demand. Right shift

Interest Rates – If interest rates rise then there’s a decrease in demand. Left shift.

Complements- If the price of complements go up, demand goes down. Left shift
Past paper questions

Specimen paper – Q8 (8)

2012 – Q1d (8)