Demand Flashcards
Demand
indicates various quantities of a good that consumers are willing and able to buy at different possible prices during a given period
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Quantity demanded
Amount of units of a good or service wanted by comsumers
Normal good
Postive correlation with income
(as income increases; demand for nomral goods increases)
example: car
Substitute Good
two or more goods which satisfy a similar need so that one good can be used in place of another
(as price of substitude good increases; demand for other good increases)
Inferior Good
negative correlation with income
(as income decreases; demand for inferior goods increases)
example: instant noodles
Factors which make up the down sloping demand curve
- diminishing marginal utility
- income effect
- substitute effect
Extension
Movement along the curve as quantity demanded increased as price moved downward
Complement Good
two or more goods which are interdepedent on one another and tend to be used together
(increase in price of complement; decrease in demand for other good)
Increase in demand
Curve shifts right
Decrease in demand
curve shifts left
Market Demand
Sum of demand of all individual consumers in a market
Contraction
Movement along the curve as quantity demanded decreased as price moved upwards
non price determinants
variables which affect the demand and that determine the position of the demand curve regardles if price has changed
competitive markets
a market composed of buyers and sellers acting independently none of whom has any ability to influence the price of a product
competition
when there are many buyers and sellers acting independently so no one can influence the price at which a product is sold in the market
