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Demand Theory (Quizlet Activity)

Here are some key terms in the theory of demand - test your understanding with this quizlet activity!

Some key demand theory terms to revise

Composite demand: Demand for a product that has more than one use e.g. demand for milk, land, straw
Derived demand: Where demand for a factor of production is linked to demand for another product
Effective demand: Demand backed by ability to pay
Income effect: When a fall in price increases a consumer's real purchasing power
Joint demand: Describes the demand for two complements e.g. smartphones and apps
Law of demand: Inverse relationship between price and demand
Off-peak demand: Periods of time when demand for consumers is below normal levels. Firms often lower the price to stimulate demand.
Real disposable income: Income adjusted for inflation after direct taxes
Seasonal demand: Demand that varies according to the time of year e.g. spending on jewellery and holidays
Speculative demand: Demand for financial assets where investors expect the price to rise in the future
Substitution effect: When a fall in price makes one product relatively cheaper to alternatives
Veblen Good: A good with a positively sloped demand curve. As price increases, people buy more of these goods to demonstrate their social status.

Economics

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