iGCSE Economics (Edexcel) 1.1 (The Market System)

name the factors of demand - correct answer advertising, income, interest rates, fashion, population, price of complements, price of substitutes explain how advertising affects demand - correct answer a good advertising campaign keeps the good being sold on the minds of its buyers; if a company does not advertise, it will soon be forgotten and stop being competitive explain how income affects demand - correct answer when income rises, a normal good's demand rises too, however demand for inferior goods drops; when income drops, demand for normal goods drops and demand for inferior goods rises; people have a higher disposable income explain how interest rates affect demand - correct answer as interest rates increase, demand for goods decreases because it is more expensive to borrow money to buy goods; as interest rates decrease, it is cheaper for people to borrow money, so they buy more things and demand increases explain how fashion affects demand - correct answer when things are fashionable, demand for them is very high, because everyone wants to have that good; however, when they go out of fashion, demand falls sharply explain how population affects demand - correct answer as population increases, demand does too; this is because a population increase means that there are more people willing and able to buy a good define "normal good" - correct answer a normal good is a good that has an increase in demand when a population's income increases define "inferior good" - correct answer an inferior good is a good that has a decrease in demand when a population's income increases