Demand Flashcards
Quantity demanded
The amount of goods and services consumers are willing and able to purchase.
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Law of Demand
price increases = quantity demanded decreases (ceteris paribus)
The Income Effect
price of product decreases = consumers’ real incomes increases so more can be bought with the same income.
The Substitution Effect
as price of a product increases more consumers will revert to a cheaper alternative.
Diminishing Marginal Utility
As more of a product is consumed, each additional unit brings declining satisfaction, and consumers are only willing to buy more at lower prices.
Market Demand Curve
The sum of all individual demand for a good or service.
Complementary Goods
Goods or services that are jointly demanded.
Substitute Goods
Goods or services that compete against each other
