Demand Flashcards
Market
Any place people come together to buy and sell goods or services
Demand
The willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period
law of demand
The law stating that as the price of a good increases, the quantity demanded of the good decreases, and that as the price of a good decreases, the quantity demanded of the good increases
quantity demanded
The number of units of a good purchased at a specific price
law of diminishing marginal utility
A law stating that as a person consumes additional units of a good, the utility gained from each additional units of the good will eventually decrease
demand schedule
The numerical representation of the law of demand
What does it mean when a demand curve shifts to the right?
an increase in demand
What does it mean when a demand curve shifts to the left?
a decrease in demand
What factors can change demand/cause demand curve to shift?
Price of related Goods
Income
Number of Buyers
Buyer preferences
Future Price
How does a change in quantity demanded affect the graph?
The point on the graph moves along the curve
Why do price and quantity demanded move in opp directions?
The law of diminishing marginal utility
normal good
a good for which the demand rises as income rises and falls as income falls
inferior good
A good for which the demand falls as income rises and rises as income falls
neutral good
A good for which the demand remains unchanged as income rises or falls
substitute
a similar good. With substitutes, the price of one and the demand for the other move in the same direction
meaning if the price of one substitute increases, the demand for the other substitute will also increase as consumers switch to the cheaper option
