Demand Flashcards
The desire to have a good or service and the ability to pay for it
Demand
One of the major factors that influence demand
Price
States that when the price of a good or service falls, consumers will buy more
Law of Demand
Quantity demanded and price have a ________________
Inverse relationship
A table that shows how much of a good or service an individual consumer is willing and able to buy at each price in a market
Demand schedule
A table that shows how much of a good or service all consumers are willing and able to buy at each price in a market
Market demand schedule
The left hand column of a demand schedule lists various ____________ of a good/service
Prices
The right hand column of a demand schedule lists _______________ of a good/service at each given price
Quantity demanded
A graph that shows how much of a good or service an individual will buy at each price
Demand curve
The demand curve should slope from the _______________ to ________________
Upper left; lower right
Shows the sum of the information on the individual demand curves of all consumers in a market
Market demand curve
The vertical axis of a demand curve shows _____________, while the horizontal shows _____________
Price; demand
States that the marginal benefit of using each additional unit of a product during a given period will decline
Law of diminishing marginal utility
Term used for a change in the amount of a product that a consumer will buy because purchasing power of his/her income changes
Income effect
Pattern of behavior that occurs when consumers react to change in the price of a good or service by buying a substitute
Substitution effect
A change in the amount of a product that consumers will buy because of a change in price
A change in demand
What are the six factors that can cause a change in demand?
Income, market size, consumer tastes, consumer expectations, substitute goods, and complementary goods
Goods that consumers demand less of when their incomes rise
Normal goods
Used books and generic food products
Inferior goods
_________ has a strong influence on consumer tastes
Advertising
Goods and services that can be used in place of other goods and services to satisfy consumer wants
Substitutes
When the use of one product increases the use of another product, the two products are called _________
Compliments
Economists use the term _______________ to describe how responsive consumers are to price changes in the marketplace
Elasticity of demand
Demand is __________ when a change in price, either up or down, leads to a relatively larger change in the quantity demanded
Elastic
Demand is ___________ when a change in price leads to a relatively smaller change in the quantity demanded
Inelastic
Elastic goods and services are often said to be ____________
Price sensitive
Goods that have a larger number of substitutes fall into the _______________ category
Elastic
If there are no substitutes for a good or service, demand for it tends to be _________
Inelastic
Something you must have, such as food or water
Necessity
Something that you desire but that is not essential to your life, such as a plasma
Luxury
When you calculate elasticity and the number is ________________, it is elastic
Greater than 1
When you calculate elasticity and the number is __________________, it is inelastic
Less than one
When you calculate elasticity and the number is __________________, it is unit elastic
Equal to 1
