Chapter 7: Demand Flashcards
Demand and price
Inversely related.
Individual demand
The amount of a product an individual would be willing and able to buy, at different prices.
Market demand
The amount of a product an individual would be willing and able to buy, at different prices. It is found by adding up each individual’s demand at different prices.
Aggregation
The addition of individual components to arrive at a total amount.
Extension in demand
A rise in the quantity demanded caused by a fall in the price of the product itself.
Contraction in demand
A fall in the quantity demanded caused by a rise in the price of the product itself.
Changes in demand
Shifts in the demand curve.
Increase in demand
A fall in demand at any given price, causing the demand curve to shift to the right.
Decrease in demand
A fall in demand at any given price, causing the demand curve to shift to the left.
Normal goods
A product whose demand increases when income increases and decreases when income falls.
Inferior goods
A product whose demand decreases when income increases and increases when income falls.
Factors that shift demand
- Substitutes
- Compements
- Income (inferior and normal)
- Trends/fashion
- Advertising
- Weather
- Population
