Consumer Ec Demand Quiz (Aprl 16th)

Demand is

how much people are willing & able to buy something at various prices at a single moment

What is demand both

the number of buyers and the quantity bought

What will figure out the best price

the marketplace

The Law of Demand states

more of an item is demanded at a lower price while less of an item is demanded at a higher price

amount of buyers & items bought

A demand curve is

a graph showing the quantity demanded at different prices

visualization of the law of demand

An example of the Law of Demand

Savannah Banana tickets

What is utility?

usefulness or satisfaction you get from a good or service

What does Marginal mean?

extra or added on amount

What is Marginal Utility?

the additional satisfaction or usefulness a consumer gains from consuming one extra unit of a good or service

What is Diminishing Marginal Utility?

satisfaction and demand decreases with each additional unit

as you add more (like buying another pencil) you diminish its worth

willingness to pay more for the first and less for the second and so one

How do companies combat Diminishing marginal utilities?

BOGO deals or deals on packs of products

Example of Diminishing Marginal Utility

hot dogs at the ballpark

Change in the Quantity of Demand

only PRICE changes the quantity demanded (peoples demand changes as prices change)

What is the Income Effect?

if the price suddenly increases, people cut back

What is the Substitution Effect?

if the price is now more or less than similar goods then demand will drop or raise

Examples of the Change in Quantity Demanded

bumper corn crops

coke vs pepsi

Change in Demand

Overall change in demand at all prices

people demand changes for non-price reasons

What is Taste?

trends are constantly changing and what people want changes over time

What are Expectations?

people will buy or not buy based on what they think will happen (buying all the toilet paper thinking it would sell out causing it to sell out)

What are substitutes?

people switch to other items if comparable and avaliable

What are Complements?

People will buy items that go with another item

if demand goes up or down for an item, the Complements of that item will follow suit

Example of Complements?

printer and printer ink

What is the Pool of Customers?

any increase or decrease in the number of people who may buy

What is Demand Elasticity?

The extent to which change in prices or situations causes a change in the quantity of demand