Chapter 3 Flashcards
DEMAND
describes how much of something people = willing & able to buy under certain circumstances
OVERALL MARKET DEMAND
if we add up all these individual choices: different people = buy products at different prices; at any given time, at any given price, some people are willing to buy and others = aren’t.
QUANTITY DEMAND
the amount of a particular good or service that buyers are willing and able to purchase at a given price at a specified period.
–> For almost all goods, the lower the price, the higher the quantity demanded
LAW OF DEMAND
this inverse relationship between price & quantity
–>When all else = held equal, quantity demanded rises as price falls!
NON-PRICE DETERMINANTS of demand
falling prices = not the only consideration in people’s decision to buy products.
–>Incomes, expectations, and tastes all play a role.
THE DEMAND CURVE
the law of demand = says that the quantity of products demanded = will be different at every price level.
DEMAND SCHEDULE
visually displays the demand schedule
–> it is a graph that shows the quantities of a particular good/service that consumers = will demand at various prices.
–> Demand curve = also represents consumers’ willingness to buy: it shows the highest amount consumers = will pay for any given quantity.
DETERMINANTS OF DEMAND
the demand curve = represents the relationship between price & quantity demanded w/ everything else held constant.
–> If everything else = NOT held constant–that is, IF one of the non-price factors that determine demand = changes–the curve will shift.
Downward-sloping curve
reflects the trade-offs that people face between:
- The benefit they expect to receive from a good
- The opportunity cost they face for buying it
The non-price determinants of demand = can be divided into 5 major categories:
- Consumer preferences
- Prices of related goods
- Incomes
- Expectations
- Number of buyers
