2.3 Demand Flashcards
Demand
The want and willingness of a consumer to buy goods and services
Quantity demanded
The amount of a good or service consumers are willing and able to buy.
Individual demand
The demand of one consumer
Market demand
Total demand for a product or service from all its consumers willing and able to buy it.
Demand schedule
Tabular presentation of a consumer’s demand at different prices
What is a demand curve
A graphical representation of the relationship between product price and the quantity of the product demanded.
Follows the law of demand
When does extension in demand occur
As price falls, the quantity demanded increases or extends
When does contraction in demand occur
As price increases, the quantity demanded decreases or contracts
Definition of non-price determinants of demand
Factors other than the price of a good or service that leads to a change in the position of the demand curve
Disposable income
The amount of income people have left to spend or save post taxes on their income
Increase in demand
Rightward shift of the demand curve showing that a greater quantity is demanded at each price than it was previously
Reasons for increase in demand
Increase in average income Deduction of income tax Change in preferences that favour the product or service Price of compliment goods fall Price of substitute goods rise
SCIPT
What is a decrease in demand
Leftward shift of the demand curve shows that a smaller quantity is demanded at each price than it was previously
Reasons for decrease in demand
Decrease in income consumers Increase in taxes of income Changes in preference that are against a product or service Price of complements rise Price of substitutes fall
SCIPT
Law of demand
inverse relationship between price and quantity demanded. ceteris paribus
