3- Demand definitions

Question 1

Demand

Answer 1

The quantity of a good/service that consumers are willing and able to buy at a given price at a given moment in time.

Question 2

Complementary goods

Answer 2

Negative XED; if good B becomes more expensive, demand for good A falls.

Question 3

Substitute goods

Answer 3

Positive XED; if good B becomes more expensive, demand for good A rises.

Question 4

Diminishing marginal utility

Answer 4

The extra benefit gained from consumption of a good generally declines as extra units are consumed; explains why the demand curve is downward sloping.
Assumes rationality.

Question 5

Total utility

Answer 5

The satisfaction gained by a customer as a result of their overall consumption of a good.

Question 6

Marginal utility

Answer 6

The change in satisfaction resulting from the consumption of the next unit of a good.

Question 7

Effective demand

Answer 7

The willingness and ability of consumers to purchase goods at different prices.