Demand Flashcards
Describe the income effect as it applies to individual demand.
A given amount of income buys more units at a lower price.
Define “demand”.
Desire, willingness, and ability to acquire a commodity.
What are the factors that change market demand?
- Size of market
- Income or wealth of market participants
- Preferences of market participants
- Change in prices of other goods and services
Define “individual demand”.
The quantity of a commodity that will be demanded by an individual (or other entity) at various prices during a specified time, ceteris paribus.
Distinguish between a change in quantity demanded and a change in demand.
A change in quantity demanded is movement along a given demand curve as a result of change in price only. A change in demand is a shift in a demand curve as a result of changes in variables other than price.
Define “market demand”.
The quantity of a commodity that will be demanded by all individuals (and other entities) in the market at various prices during a specified time, ceteris paribus.
Describe the substitution effect as it applies to individual demand.
Lower-priced items will be purchased as substitutes for higher-priced items.
