Economics: Application of Demand Flashcards
Consumption
______ – range of choices
between privately produced good
and those supplied by the
government
Production
\_\_\_\_\_\_– generally concerns with what and how much to produce (needs, wants and demand of consumers) and how to allocate resources to meet the demands of the consumers
Distribution
_____ – proper resource
allocation to benefit all members of
the society
Growth over time
_____ – all decisions
on choice, consumption, production
must be seen in context it will affect
the future
Efficiency
_____ - refers to the productivity and
proper allocation of resources
Effectiveness
_____- attainment of goals and
objectives
Equity
_____ - justice and fairness
Market
where goods and services are
traded
Demand
pertains to the quantity of goods and
services that people are ready to buy at
a given price, at ceteris paribus.
Demand, therefore implies three things:
- The desire to possess a thing (good or
service). - The ability to pay for it or the means of
purchasing it. - The willingness to utilize it.
Methods of Demand Analysis
Demand Schedule
Demand Curve
Demand Function
Demand Function
shows the relationship between the
demand for a commodity and the factors that determine or
influence the demand.
Mathematical function for demand:
Q_D = f (product’s own price, income of
consumers, price of related goods, etc)
The Law of Demand
states that if the price goes up, the quantity demanded will go down. Conversely, if the price goes down, the quantity demanded will go up in ceteris paribus.
Demand equation:
Q_D = a – bP QD = quantity demanded at a particular price a = intercept of the demand curve b = slope of the demand curve p = price of goods a particular time
