Supply and Demand - Demand Flashcards
what is a competitive market?
contains many buyers/sellers of same good/service, none of whom can influence the price
what is a supply-demand model?
a model of how a competitive market behaves
what does demand represent?
the behaviour of buyers
a demand curve shows the _____________ at various prices
quantity demanded
what is quantity demanded?
what buyers are willing to purchase at a particular price
state the law of demand
as price falls, the quantity demanded rises
what does a movement along the curve indicate?
a change in price
what are the 5 demand shifters?
Changes in the prices of related goods or services Changes in income Changes in tastes Changes in expectations Changes in the number of consumers
two goods are ___________ if a decrease in the price of one leads to a decrease in demand for the other (and vice versa)
substitues
two goods are _____________ if a decrease in the price of one leads to an increase in the demand for the other (and vice versa)
complements
consumers sometimes have to buy items together
define normal good
demand increases when income increases (and vice versa)
define inferior good
demand decreases when income increases (and vice versa)
tastes and preferences are _______ and ____ among consumers
subjective, vary
seasonal changes affect demand too
how do expectations affect demand?
if consumers have a choice about timing of purchases, they buy according to expectations
buyers adjust current spending in anticipation of direction of future prices to obtain lowest price
as the ________ of an economy changes, the _________ of _______ of a particular good also changes (affecting demand)
population, number, buyers
