Chapter 3: Demand and Supply Flashcards
Market
Any place people come together to trade
Demand
The willingness and ability of buyers to purchase different quantities of a good
at different prices
during a specific time period.
Two important aspects of demand
- Willing
- Able
to undergo the purchase
Law of demand
As the price of a good rises, the quantity demanded of the good falls (ceteris paribus), and vice versa.
Demand Schedule
The numberical tabulation of the quantity demanded of a good at different prices. A demand schedule is the numerical representation of the law of demand.
Demand Curve
The graphical representation of the law of demand.
Law of Diminishing Marginal Utility
For a given time period, the marginal utility of satisfaction gained by consuming equal successive units of a good will decline as the amount consumed increases.
Quantity demanded
The NUMBER of UNITS of a good that individuals are willing and able to buy at a particular price.
Own Price
The price of a good.
Change in quantity demanded
A movement from one point to another point on the same demand curve caused by a change in the price of the good.
Change in demand
Shift in the demand curve.
Increase in demand
Rightward shift in the demand curve
Decrease in demand
Leftward shift in the demand curve.
Normal Good
A good for which demand rises as income rises.
Inferior Good
A good for which demand falls as income rises.