Unit 8 Flashcards
What are the conditions of demand?
The conditions of demand are factors other than price, such as income or the price of other goods, which lead to changes in demand and are associated with shifts in the demand curve.
Define consumer surplus.
Consumer surplus is the difference between how much buyers are prepared to pay for a good and what they actually pay.
What is a contraction of demand?
How is this shown on the demand curve?
A contraction of demand occurs when quantity demand for a product falls because of a rise in the price of the product. It is shown by a movement up the demand curve.
What is the demand curve?
The demand curve is the line on a price/quantity diagram which shows the level of effective demand at any given price level.
Define demand or effective demand.
Demand or effective demand is the quantity purchased of a good at any given price, over a given period of time.
What is an extension of demand?
How is this shown on the demand curve?
An extension of demand occurs when quantity demanded for a good increases because its price falls, it is shown by a movement down the demand curve.
Explain the law of diminishing marginal utility?
The value or utility that individual consumers gain from the last product consumed falls, the greater the number of units consumed.
What is a shift in the demand curve?
A shift of the demand curve is a movement of the whole demand curve either right or left of the original, this is caused by a change in one of the conditions of demand.
