Demand Flashcards
Demand
The willingness and ability to purchase a good or service at the given price in a given period of time
Law of Demand
Normally, the quantity demanded varies inversely with the price
Individual Demand
The demand for a good or service by an individual customer
Market Demand
The total demand for a good or service found by adding up all individual demands
Demand Curve
A graph showing how the demand for a product varies with changes in its price
Shift of the Demand Curve
A complete movement of the existing demand curve either outward, to the right, or inward, to the left
Movement along the Demand Curve
When the price changes (due to a change in supply) leading to a movement up or down the existing demand curve
Subsidy
An amount of money a government gives directly to firms to encourage production and consumption
Tax
A compulsory payment to the government
PED
The responsiveness of quantity demanded to a change in the price of a product
Elastic Demand
When the percentage change in quantity demanded is greater than the percentage change in price
Inelastic Demand
When the percentage change in quantity demanded is less than the percentage change in price
Potential causes of a shift in the Demand Curve
- Increase in Income
- Increase in Marketing
- Changing trends
- Preference for a substitute
- Complementary Goods
- Expectation of a rise in price
- Population changes
- Government policies
