Demand Flashcards
When is a market created?
- A market is created when buyers and sellers interact.
* A Market is anywhere buyers and sellers can exchange goods or services
What is a sub-market?
- A part of an overall market, but features unique characteristics.
- Sub markets make up a market.
What is demand?
Demand is the quantity of a good/service that consumers are willing and able to buy at a given price, at a particular time.
What does the demand curve show?
- Shows the relationship between price and quantity demanded.
- At any given point along the curve, it shows the quantity of the good or service that would be bought at a particular price
What does the slope of the demand curve signify?
• Higher the price charged for a good, the lower the quantity demanded.
What is the income effect?
• Assuming a fixed level of income, the income effect means that as a price falls, the amount that consumers can buy with their level of income increases, and so the demand increases
What is the substitution effect?
A fall in the price of a good makes it relatively cheaper than other goods, so consumers will increase demand for the cheaper good and reduce demand for the more expensive good.
What happens when there is an increase the amount demand at a given price?
The demand curve shifts to the right
What happens when there is a decrease in the price demanded at a given price?
Demand curve moves to the left.
What is an expansion of demand?
Larger quantity being demanded at a lower price level, a movement along the curve occurs
What is a contraction in demand?
A change in the price of a given good/service, this will cause a movement along the curve, a lower quantity being demanded at a higher price.
What does not shift demand curve?
Price changes
What are the two demands?
- Individual Demand
* Market Demand
What is market demand?
Sum of all individual demands in a market
What is individual demand?
Demand of an individual or firm, measured by the quantity
bought at a certain price at one point in time.
