ECON: Unit 2: Ch 4 Flashcards
Demand
Desire to purchase an item at a specific price, time, with the ability and willingness to pay
Microeconomic concept
Central to what/how/ for whom process
2 variables: price and quantity of a specific process at a given point in time
Symbols
P, price D, demand S, supply Delta, change Y, income QD, quantity demanded QS, quantity supplied
Quantity
One specific point stating how many units are demanded At a specific price
General demand
Serious of points stating how many units are demanded at various prices
Demand schedule
Quantity of demand varies with price
Collected data in a table
Demand curve
Line graph that shows amount of product that will be purchased at each price
Price on y axis, quantity demanded on x
Ceteris paribus
All other things being equal
Can only change one factor at a time to see what will happen to supply and demand
Studying short term affects
Law of demand
Quantity of demand varies inversely with its price
High demand, low price
Market demand
Shows quantities demanded by everyone who is interested in purchasing the product
Marginal utility
Extra usefulness or additional satisfaction a person gets from acquiring or using one more unit of a product
Diminishing marginal utility
Principle at states that the extra satisfaction we get from using additional quantities of a product begins to decline
Change in price…
Equal to change in quantity demanded
Income effect
Change in QD because of change in price that alters consumers real income
Substitution effect
Change in QD because of change in relative price of product
Change in demand factors
- results in entirely new demand curve
- consumer income, consumer taste(ads, season), substitutes price change, complements price change, expectations of price, number of consumers