Demand Flashcards
Describe the substitution effect as it applies to individual demand.
Lower-priced items will be purchased as substitutes for higher-priced items.
Define “demand”?
Desire, willingness, and ability to acquire a commodity (good or service)
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
What are 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.
Describe the income effect as it applies to individual demand.
A given amount of income buys more units at a lower price.
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 a 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.
