2.2 Demand Flashcards
When is a market created
When buyers and sellers interact
What is a sub-market
It is a part of an overall market, but has some unique characteristics
In each sub-market there is a different structure
Give an example of a sub-market
From the market of banking, each sub-market could be credit cards, loans, mortgages or savings account
What is demand
It is the quantity of a good or service that consumers are able and willing to buy at a given price during a given period of time
How does demand vary
Demand varies with price
The lower the price, the more affordable the good and so consumer demand increases
What is marginal utility
The extra satisfaction derived from consuming one extra unit of the good
What is the law of diminishing marginal utility
It suggests that consumer surplus generally declines with extra units consumed.
This is because the extra unit generates less utility than the ones already consumed
Therefore, consumers are willing to pay less for extra units
What is individual demand
It is the demand of an individual or firm, measured by the quantity bought at a certain price at one point in time
What is market demand
It is the sun of all individual demands in a market
What are the four types of demand
Derived
Composite
Joint
Competitive
What is derived demand with example
This is when one good is linked to the demand for a related good
For example, the demand for bricks is derived from the demand for the building of new houses
What is composite demand with an example
This is when the hood demanded has more than one use
For example milk. An increase in demand for cheese means more cheese will be supplied and therefore less butter can be supplied
What is joint demand which example
This is when goods are bought together
For example, a camera and a memory card
What is competitive demand with example
This is the demand for goods which are substitutable, so the sale of the good is in competition with the substitute
For example, a Samsung TV is in competitive demand with a Sony TV
Explain the movements along this demand curve
Explain shifting of this demand curve
