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Questions and Answers
What three elements determine effective demand?
What three elements determine effective demand?
- Supply levels, consumer preferences, economic stability
- Income, advertising, product quality
- Desire, marketing strategies, competition levels
- Desire, means to purchase, willingness to pay (correct)
How is demand differentiated from mere desire?
How is demand differentiated from mere desire?
- Demand is based solely on consumer interests.
- Demand is always fixed and does not change.
- Demand requires purchasing power alongside desire. (correct)
- Demand excludes any consideration of prices.
What aspect of quantity demanded must be specified?
What aspect of quantity demanded must be specified?
- The promotional strategies employed
- The geographical distribution of consumers
- The brands available in the market
- The time period over which demand is calculated (correct)
What does the term 'flow' refer to in the context of quantity demanded?
What does the term 'flow' refer to in the context of quantity demanded?
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Which of the following is NOT a characteristic of demand?
Which of the following is NOT a characteristic of demand?
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What signifies effective demand in economic terms?
What signifies effective demand in economic terms?
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According to the definition of demand, which factors may also affect the quantity demanded?
According to the definition of demand, which factors may also affect the quantity demanded?
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Which statement best reflects the relationship between demand and price?
Which statement best reflects the relationship between demand and price?
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Study Notes
Definition of Demand
- Demand is the quantity of a good or service that buyers are willing and able to purchase at different price levels over a specific time frame.
- Demand encompasses not only desire but also factors such as purchasing power and willingness to pay.
Components of Effective Demand
- Effective demand consists of three main elements:
- Desire to purchase a product.
- Financial means to afford it.
- Willingness to spend the financial resources.
Characteristics of Demand
- Effective demand influences economic analysis and business decisions.
- Quantity demanded is always linked to a specific price point.
- Different prices lead to varying quantities of a commodity being demanded.
Demand Flow Concept
- Demand is a continuous flow rather than a one-time purchase; it reflects ongoing purchasing behavior.
- It is expressed in units over time, e.g., specific quantities per day or week (e.g., one thousand dozens of oranges per day).
Summary of Demand
- Demand represents the various quantities of a good or service that consumers are willing to buy in a given market, influenced by price, income levels, and prices of related goods.
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