Micro: 1.2.2 Demand Flashcards
What is demand?
Demand refers to the amount that consumers are willing and able to buy at any given price in a given period of time.
What does a demand curve show?
A demand curve shows the relationship between price and quantity demanded.
What is the slope of the demand curve?
The demand curve slopes downwards from left to right because, as price falls, people are more willing to buy a good.
What happens when the price changes?
Changing the price leads to movements along the demand curve, not a shift.
What is an extension of demand?
An extension of demand occurs when the price falls and the quantity demanded increases.
What is a contraction in demand?
A contraction in demand occurs when the price rises and the quantity demanded falls.
What factors may cause a shift in the demand curve?
Factors include changes in real incomes, tastes and fashions, advertising and branding, prices of substitutes and complementary goods, and changes in population size and age distribution.
What is diminishing marginal utility?
Diminishing marginal utility is the additional satisfaction gained from each additional unit of consumption, which usually decreases with increased consumption.
What does the law of diminishing marginal utility explain?
The law of diminishing marginal utility helps economists understand the negative sloping demand curve.
Draw a demand cure with diffrent prices for t-shirts
