demand Flashcards
what is demand
the desire, ability, and willingness to buy a product
law of demand
as price falls qquantity demanded rises
as price rises quantity demanded falls
quantity demanded
the amount of items that will be bought at a particular price
demand schedule
a chart showing how much of an item will be bought at different prices
xy table of quantity demanded
changes in quantity demanded
can be caused only by a change in the price od the good
a movement along the demand curve
change in demand
means that more or less is demanded at EVERY price
determinants of demand
the factors that change the quantity demanded without a change in price
ceteris paribus
all other rhinfs held constant
when ceteris paribus assumption is dropped, movement no longer occurs along demand curve, the entire demand curve shifts
at same price more people are willing and able to purchase that good
5 determinants of demand
consumer preference
market size
income
substitutes / price of related goods
consumer security (expectations)
elasticity of demand
the response in quantity demanded because of a change in price
tells whether a price should be changed
elastic
when a given change in price causes a relatively larger change in quantity demanded
inelastic
when a given channge in price causes a relatively smaller change in quantity demanded
unit elastic
whn a given change in price causes a proportional change in quantity demanded
factors that affect elasticity
availability of substitutes
% of consumer’s income
necessity orluxury
duration of price change
brand loyalty
who pays
elasticity formula
p2-p1
———- x 100
p1