Consumer Choices Using Demand Flashcards
Resources:
personal endowments we have (Family, Income, Time, Skills). F.I.T.S.
Means:
personal resources.
Family:
parents, grandparents, brothers and sisters, and extended family.
Time:
hours, days available.
Skills:
abilities, qualifications.
Income:
money earned before tax
Wants:
desires. Goods and services that we would like to have but are not essential for life.
Needs:
essentials for living.
Values:
strongly held beliefs. E.g. Family, friends, healthy eating, environmental care.
Economic decision:
a choice between alternatives.
Scarcity:
resources are limited relative to our wants.
Opportunity Cost:
second best alternative foregone when a decision is made.
Individual Demand:
The quantity of a good that a consumer is willing and able to purchase, at a range of prices, in a given time period.
Willing:
Have the desire.
Able:
Have the income.
Demand schedule:
Table showing quantity demanded at a range of different prices.
Ceteris paribus:
Everything stays constant apart from the price.
Consumer:
A person who purchases goods or services.
Demand Curve:
A curve showing quantity demanded at a range of prices.
Quantity demanded:
Is the amount a consumer will purchase at one price. One point on the demand curve.
Demand:
Is the amount a consumer is willing and able to purchase at a range of prices. The entire demand curve.
T.O.A.D.S:
(Title, Origin, Axes, D Label, and Scale)
Law of Demand:
As the price decreases, the quantity demanded increases and as the price increases, the quantity demanded falls, assuming Ceteris paribus.
Movement along the demand curve:
change in price/quantity demanded.
Relatively more affordable:
cheaper than it was.
Flow-on effect:
impact of the change in the price.
Non-price factors:
changes in tastes/fashion/preferences or income/disposable income or price of complements or price of substitutes (T.I.C.S).
Disposable income:
income after tax and transfers.
Complements:
goods used together.
Substitutes:
goods used in place of each other.
Transfers:
government benefits to households.
Taste fashion preferences:
consumer desire for a good.
