Demand Flashcards

1
Q

Describe the substitution effect as it applies to individual demand.

A

Lower-priced items will be purchased as substitutes for higher-priced items.

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2
Q

Define “demand”?

A

Desire, willingness, and ability to acquire a commodity (good or service)

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3
Q

Define “market demand”.

A

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

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4
Q

What are factors that change market demand?

A

Size of market
Income or wealth of market participants
Preferences of market participants
Change in prices of other goods and services

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5
Q

Define “individual demand”?

A

The quantity of a commodity that will be demanded by an individual (or other entity) at various prices during a specified time, ceteris paribus.

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6
Q

Describe the income effect as it applies to individual demand.

A

A given amount of income buys more units at a lower price.

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7
Q

Distinguish between a change in quantity demanded and a change in demand.

A

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.

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