Chapter 3: Demand

Question 1

demand

Answer 1

the willingness and ability to pay for something at a given time at a given price

Question 2

market

Answer 2

anyplace where or mechanism by which buyers and sellers interact to trade goods, services, or resources

Question 3

good

Answer 3

a tangible product that consumers, firms, or governments wish to purchase

Question 4

service

Answer 4

an often intangible product or action that consumers, firms, or governments which to purchase

Question 5

resources

Answer 5

input used to produce goods and services; land, labor, capital, entrepreneurial ability

Question 6

law of demand

Answer 6

a principle in economics that states that as the price of a good, service, or resource rises, the quantity demanded will decrease and vice versa (all else held constant)

Question 7

demand schedule

Answer 7

a tabular representation of the relationship between price and quantities consumers are willing and able to buy over a period of time (all else held constant)

Question 8

demand curve

Answer 8

a graphical representation of the relationship between price and quantities consumers are willing and able to buy over a period of time (all else held constant)

Question 9

quantity demanded

Answer 9

quantity of a good, service, or resource that consumers are willing and able to buy at a given price

Question 10

income effect

Answer 10

the effect that a change in the price of a good, service, resources has on the purchasing power of income

Question 11

substitution effect

Answer 11

the effect that a change in the price of a good, service, resources has on the demand for another; incentive to find a substitute

Question 12

diminishing marginal utility

Answer 12

the negative relationship between the quantity of a good, service, resource and the marginal utility obtained from each additional unit consumed in a given period of time

Question 13

market demand

Answer 13

overall demand for a good, service, resources

Question 14

change (shift) in demand

Answer 14

a change in the quantity of a good, service, resource demanded at every price

Question 15

movement along the demand curve

Answer 15

a change in the quantity a good, service, resource due to a change in its price

Question 16

normal good

Answer 16

a good for which there is a direct relationship between the demand for the good and income

Question 17

inferior good

Answer 17

a good for which there is a inverse relationship between the demand for the good and income

Question 18

tastes and preferences

Answer 18

the perception of the desirability associated with a good, service, resource

Question 19

buyers

Answer 19

market participants who seek to obtain goods, services, resources

Question 20

expectations

Answer 20

the anticipation by individuals and firms of costs and benefits that lie in the future

Question 21

when the price of a good changes; move along demand curve

Answer 21

increase/decrease in quantity demanded

Question 22

when a nonprice determinate of demand changes; demand curve shifts

Answer 22

increase/decrease in demand

Question 23

substitutes

Answer 23

goods, services, resources that are viewed as replacements for another

Question 24

complements

Answer 24

goods, services, resources that are used or consumed with another