Micro T2 - Consumer Behaviour Flashcards
What is the law of demand
High prices, low demand and vice versa
What is desire demand
What we wish to have but cannot afford
What is effective demand
What we wish to have and can afford
How do we calculate market demand
The total sum of each individuals demand in an economy
Other than price what affects demand
Incomes
Advertising
Price of substitues
Price of complementary products
Trends
Quality
Weather
Law
Future uncertainty
What are normal goods
Goods which demands increase as incomes do
What are inferior goods
Goods which demand doesn’t increase as incomes do
What is the idea of composite demand
The idea a good is demanded for more than one reason
What is derived demand
The demand of one good or services coming from another good - eg, the demand for steel increasing due to the demand for cars increasing
What is rational behavuour
Where consumers act in the pursuit of best interest
What does traditional economic theory assume
That everyone has perfect economic information
What is utility
The satisfaction of consuming a good or a services
What is marginal utility
The additional welfare and satisfaction of consuming an extra unit of a given good
What is diminishing marginal utility
The continuous increase in consumption of a good, will lead to a fall in satisfaction
What is utility maxamisation
The idea economic agents aim to gain the highest level of satisfaction through their economic descions
