Market Economy MCQ 1 (Demand)

Types of Demand

• Individual Demand: The quantity demanded of a good or service by individual consumers at different prices.
• Market Demand: The aggregate quantity of a good/service that would be demanded by all consumers at different prices.
• Derived Demand: Applies to factors of production, where demand for a good is not for its own sake but for its use in the production of other goods.
• Composite Demand: Applies where goods have more than one use, and an increase in demand for one product can result in a fall in supply for another.
• Joint Demand: Refers to complementary goods that are bought and sold together, such as fish and chips.
• Effective Demand: Demand that is supported by the necessary purchasing power, referring to the willingness and ability of consumers to purchase goods/services at different prices.

Demand Schedule

• A table that gives the quantities of a good/service that would be demanded by consumers at different prices.

Exceptions to the Law of Demand

Snob Goods/Veblen Goods

• The high price of these goods makes them attractive to those who can afford them.
• A rise in price could lead to a rise in consumption.

Giffen Goods

• Essential items with little to no substitutes.
• Those on low income purchase them.
• When price rises, demand also rises, e.g. in the 1800s, if the price of bread rose, demand for bread also rose as people had to replace their one meal of meat with another meal of bread.

Goods Affected by Expectations

• When property prices begin to fall, consumers may hold off on buying as they wait for prices to fall further.

This quiz covers the different types of demand, including individual demand, market demand, derived demand, and composite demand, in the context of economics and microeconomics.