DEMAND Flashcards
what is demand (effective)
Effective demand refers to the willingness and ability of consumers to purchase goods at different prices.
what is the demand curve
The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period of time.
what is total utility
Total utility refers to the complete amount of satisfaction gained.
what is diminishing marginal utility
Diminishing marginal utility is the decrease in satisfaction a consumer has from the consumption of each extra unit of a good or service.
what is the law of demand
The law of demand states that a higher price leads to a lower quantity demanded and that a lower price leads to a higher quantity demanded - an inverse relationship.
what is an extension of demand
Extension of demand is the increase in demand due to the fall in price, all other factors remaining constant.
what is a contraction of demand
Contraction of demand is the fall in demand due to the rise in price, all other factors remaining constant.
what is a normal good
A normal good means an increase in income causes an increase in demand. It has a positive income elasticity of demand YED.
what are the conditions of demand
The conditions of demand for a good depends on several factors, such as price of the good, perceived quality, advertising, income, confidence of consumers and changes in taste and fashion.
what is an inferior good
An inferior good means an increase in income causes a fall in demand. It is a good with a negative income elasticity of demand (YED).
what is a substitute good
A substitute good refers to a product or service that consumers see as essentially the same or similar-enough to another product such as Coca Cola and Pepsi.
what is a complimentary good (compliment)
Complementary goods are a product that is used or consumed jointly with another product such as bread and butter.
what is revenue
Revenue refers to the income obtained by a firm through the sale of goods at different prices.
what is an increase in demand
Increases in demand are shown by a shift to the right in the demand curve. This could be caused by a number of factors, including a rise in income, a rise in the price of a substitute or a fall in the price of a complement.
what is a decrease in demand
Decrease in demand are shown by a shift to the left of the demand curve. This could be caused by a number of factors, including a fall in income, assuming a good is a normal good, a fall in the price of a substitute and a rise in the price of a complement.
