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Demand
| Question | Answer |
|---|---|
| Demand | is the number of units of goods a consumer will buy at various prices. |
| The Law of Demand | states that an increase in price leads to a decrease in quantity demanded or a decrease in price leads to an increase in quantity demanded all else being equal. EXAMPLE |
| Individual Demand | studies the quantities of a good that an individual consumer is prepared to buy at each price. |
| Market/Aggregate Demand | shows the different quantities of a good that all consumers in the market are prepared to buy at each price. It is dervived by adding together all the individual quantities demanded for the good. |
| Demand Schedule | is a table that shows the different quantities demanded for a good at various market prices at any given time. |
| Individual Demand Schedule | Lists the different quantities of a good that an individual consumer is prepared to buy at each price. |
| Market/Aggregate Demand Schedule | Lists the different quantities of a good that all consumers in the market are prepared to buy at each price. It is derived by adding together all the individual demand schedules for the good. |
| Consumer Surplus | the BENEFIT to the consumer due to the difference between what consumers actually pay to consume a good and what they would have been willing to pay rather than to go without the good. EXAMPLE |
| Effective Demand | Consumers must be willing to buy and be capable of paying the price set by the supplier. It is demand backed by the necessary purchasing power i.e. money. |
| Derived Demand | occurs when one commodity is an essential part of another commodity and it is demanded not for its own sake but because it is required to manufacture another good. Exmaples. |
| Composite Demand | occurs when a commodity is required for a number of different uses. EXAMPLE |
| Joint Demand | occurs when the demand for one commodity is joined with the demand for another. In general the commodities involved cannot be seperated and in fact form a single good or can also be called complementary goods. EXAMPLES |
| Demand Curve | is a graph illustrating the demand for a good at various prices at any given time. |
| Shift in the Demand Curve | is caused by a change in any non-price determinant of demand. EXAMPLE |
| Movement ALONG a Demand Curve | is caused by a change in the price of the good itself. |
| Complementary Goods | are goods that are used jointly. The use of one involves the use of the other. EXAMPLE |
| Substitute Goods | are goods that satisfy the same needs and thus can be considered as alternatives to each other. |
| Normal Good | is a good that obeys the law of demand and which has a positive income effect. (Y^QD^) |
| Inferior Good | are a minority of goods that are not necessarily of inferior quality. They are less attractive at higher incomes and tend to be replaced by more expensive substitutes. Hence, goods which have a negative income effect. |
| Giffen Goods | are goods with a positive price effect. Hence, a rise in price causes an increase in quantity demanded, while a fall in price causes a fall in quantity demanded. |
Created by:
cmcgrath
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