Demand Flashcards
1
Q
What is demand
A
Demand refers to the quantity of a good or service purchased at a given price over a given time period
2
Q
What does the law of demand state
A
The law of demand states that ceteris paribus an increase in price will lead to a decrease in quantity demanded and conversely a decrease in price will cause an increase in quantity demanded
3
Q
What are the conditions of demand
A
- population size
- price of substitute goods
- price of complementary goods
- advertisement
- population (structure)
- tastes of consumers
4
Q
Why is price and quantity inversely related
A
Due to diminishing marginal utility
5
Q
What is total utility
A
The amount of satisfaction which occurs from consuming a product
6
Q
What is marginal utility
A
The amount of satisfaction derived from consuming one more unit
7
Q
What is the law of diminishing marginal utility
A
Theory believes that marginal utility declines as more is consumed
