The curve simply shows how the demand for a particular good or service can change really easily due to a change in price.
As you can see with the curve, one assumption would say that the demand is "Price-elastic" This shows that the consumer is in a position to change the demand in response to any changes within the price. This shows and implies that the goods/service is continuously substitutable. An example of this would be as the price goes up the consumer can find something different that will provide a similar benefit. An example of this would be if the price of Coca-Cola were to increase sharply, consumers might switch to Pepsi due to the product being cheaper. A demand curve also shows and expresses the total relationship between price and demand in the economy for the good/service that is being considered. Overall this shows the demand of all the consumers added together. The law of supply demonstrates the certain quantities that will be sold at a certain price. Unlike the law of demand, the supply relationship has an upwards slope. This means that the higher the price, the higher the quantity supplied. .
Question 1.
Define and then explain the key drivers of Economic Growth.
Response.
Economic growth within the business world is known as a long term expansion of a country's productive potential. Short term growth is measured by the annual % change in real national output. This is used and driven by the level of aggregate demand. Long term growth is shown by the increase in trend or potential GDP and this is illustrated by an outward shift in a country's long run aggregate supply curve (LRAS). Here are the key drivers of Economic Growth:.
- There have been numerous research studies in what determines long term GDP growth.
- Every country is different, each factor will vary in importance for a country at a given point in time.
- Remember too that in our interconnected globalising world, growth does not happen in isolation.
