Demand Flashcards
What is Quantity Demanded?
Amount of a good buyers are willing and able to purchase
What does the Law of Demand state?
When the price of a good rises, the quantity demanded falls, and when the price falls, the quantity demanded rises
Define Market Demand.
Sum of all individual demands for a good or service
What is the Market Demand Curve?
Sum the individual demand curves horizontally
What happens to total quantity demanded as the price of the good varies?
Total quantity demanded of a good varies as the price of the good varies
What causes an Increase in Demand?
Any change that increases the quantity demanded at every price
What is the effect of an Increase in Demand on the demand curve?
Demand shifts curve right
What causes a Decrease in Demand?
Any change that decreases the quantity demanded at every price
What is the effect of a Decrease in Demand on the demand curve?
Demand shifts curve left
List variables that can shift the Demand Curve.
- Income
- Prices of Related Goods
- Tastes
- Expectations
- Number of Buyers
What is a Normal Good?
An increase in income leads to an increase in demand
What is an Interior Good?
An increase in income leads to a decrease in demand
What happens to the demand for a substitute good when the price of one good increases?
Demand for the other good increases
What happens to the demand for a complement good when the price of one good increases?
Demand for the other good decreases
What effect does a change in tastes have on demand?
Changes in demand
Preferences and tastes can significantly influence consumer behavior.
What is the impact on current demand if consumers expect an increase in income?
Increase in current demand
Expectations about future income can influence present consumption.
What is the impact on current demand if consumers expect higher prices in the future?
Increase in current demand
Anticipating higher future prices can lead consumers to buy more now.
What is the effect on market demand if the number of buyers increases?
Market demand increases
An increase in the number of buyers typically leads to higher overall demand.
What happens to demand for normal goods when income increases?
Demand for normal goods increases as income increases.
What are inferior goods?
Inferior goods are those for which demand decreases as income increases.
How do income levels affect the demand for used goods?
As income goes up, demand for used goods goes down.
What is the relationship between income rises and unhealthy goods?
When income rises, the demand for unhealthy goods lowers.
What are substitutes in economics?
Substitutes are related goods that can replace each other.
Example: Camry & Honda are in the same category.
What are complements in economics?
Complements are related goods that are used together.
Example: A laptop needs a computer chip.
What happens to the prices of complements?
If the price of one complement goes up, the price of the other typically goes up as well.
How do tastes affect demand?
Tastes can change demand for goods.
Examples: Fashion trends, seasonal clothing, and the shift from physical to digital streaming services.
