2.2 demand Flashcards
what is demand?
the quantity of a good or service that consumers are willing and able to buy at a given price at a given period of time.
why is the demand curve downwards sloping?
due to diminishing marginal utility.
this suggests that consumer surplus declines with extra units consumed as extra units generate less utility than the one before
additionally as price increases, consumers gain less utility and are priced out of the market.
what are the types of demand?
derived- when the demand of one good is linked to the demand for another
composite- when the good demanded has more than one use
joint- when goods are bought together
competitive- the demand for goods is substitutable
what causes a shift in demand?
Population
Advertising
Substitutes
Incomes
Fashion and taste
Interest rates
Compliments
