ECF 100: Introduction to Microeconomics - Unit 5 (a) Demand

This set of flashcards covers vocabulary and key concepts from the Introduction to Microeconomics lecture on Demand, including the Law of Demand, determinants, and market dynamics.

Demand

The amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time, other things equal.

Willingness and Ability

The two essential elements that stand out from the definition of demand showing what consumers are prepared to buy and can afford.

Law of Demand

The principle that, other things equal, an increase in a product’s price will reduce the quantity demanded, and a decrease in price will increase the quantity demanded.

Ceteris paribus

A Latin phrase meaning "other things equal" used as an assumption that only own price changes while other factors affecting demand remain constant.

Demand Schedule

A table format showing the total quantity of a good or service that buyers wish to buy at each specific price.

Demand Curve

A graphic representation showing the total quantity of a good or service that buyers wish to buy at each price, typically displaying a negative relationship between price and quantity.

Normal Goods

Goods for which a rise in income, ceteris paribus, leads to an increase in demand, and a decrease in income leads to a decrease in demand.

Inferior Goods

Goods for which an increase in income leads to a decrease in demand, such as Kapenta, as consumers switch to better goods like meat.

Substitute Goods

Two goods where an increase in the price of one leads to an increase in the demand for the other, such as Fanta and Mirinda.

Complement Goods

Two goods where an increase in the price of one leads to a decrease in the demand for the other, such as Cars and Fuel or Bread and Bata.

Tastes

Consumer preferences where a favorable change makes a product more desirable, increasing demand, while unfavorable changes decrease demand.

Expectations

Anticipations about future income or future prices that affect the demand for a good or service today.

Number of Buyers

A determinant where an increase in the population or consumers in a market leads to an increase in demand for products like diapers or housing.

Shift in demand curve

A change caused by factors other than the own price of a commodity, where a move to the right indicates an increase in demand and a move to the left indicates a decrease.

Movement along the demand curve

A change in the quantity demanded resulting from a change in the own price of a commodity, ceteris paribus.

Demand Function

A mathematical generalization specifying the relationship between quantity demanded and its independent variables: $Q_{dx} = f(P_x, P_y, M, T, B, E)$.

Market Demand

The sum of all individual consumers' demands for a product within a specific market.