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Ch 4 Demand

A relation showing the quantities of a good that consumers are willing and able to buy at various prices per period, other things constant Demand
A curve or line showing the quantities of a particular good demanded at various prices during a given time period, other things constant Demand curve
Measures how responsive quantity demanded is to a price change; the percentage change in quantity demanded divided by the percentage change in price Elasticity of demand
The demand of an individual customer Individual demanded
The quantity of a good demanded per period relates inversely to its price, other things constant Law of demand
The more of a good a person consumes per period the smaller the increase in total utility from consuming one more unit, other things constant Law of diminishing marginal utility
The change in total utility resulting a one-unit change in consumption of a good Marginal utility
The sum of the individual demands of all consumers in the market Market demand
Change in quantity supplied resulting from a change in the price of the good, other things constant Movement along a given demand curve
The amount demanded at a particular price Quantity demanded
Increase or decrease in demand resulting from a change in one of the determinants of demand, other things constant Shift of a demand curve
Consumer preferences, likes and dislikes in consumption; assumed to be constant along a given demand curve Tastes
Price multiplied by the quantity demanded at that price Total revenue
Provide an example of a normal good and an inferior good. How does an increase in income affect the demand for each of these goods or services? Normal: pizza (demand stays same as \$\$ increases. Inferior: bologna (demand decreases when \$\$\$ increases).
Provide two examples of the differences in the opportunity cost of time among consumers and how this shapes different consumption patterns. Making vs. buying pizza, waiting in line at Disney world. More willing to spend \$\$\$ to save time.
Describe a situation you have encountered that illustrated the law of diminishing marginal utility. Watching one Lord of the Rings fun, 2nd not so much. 1 slice of pizza OK, 2nd less so
Leslie has started her own business selling hand-knit scarves, hats, and mitten. She begins advertising in the local newspaper and, as a result, the demand for her products increases. How is the demand curve affected? Shifts right
Suppose that Leslie then lowers the price of her scarves from \$15 to \$10 per scarf. Her sales grow from 25 scarves per week to 50. Calculate the elasticity of demand. % change in # demand/ % change in price 100/33. 3.3
Determine if demand is elastic, unit elastic, or inelastic. Why? elastic. Elasticity greater than 1.0
Created by: rejoyce431

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