Module 3 - Microeconomics

demand

Consumer willingness and ability to buy products

price

The amount of money exchanged for a good or service

quantity demanded

total number of units demanded at a given price

law of demand

all else held equal, if the price rises/falls, quantity demanded will rise/fall

demand schedule

a table that shows the relationship between the price of a good and the quantity demanded

demand curve

a graph of the relationship between the price of a good and the quantity demanded

consumer surplus

difference between what buyers are willing to pay and the price; 1/2b*h

producer surplus

difference between what the price the seller gets and what price they would produce at

factors that affect demand

income, normal vs inferior goods, tastes and preference, changes in population, price of related goods, substitutes vs complements

ceteris paribus assumption

other things being equal; we're only looking at the relationship between price and quantity in a single demand curve

normal good

a good that consumers demand more of when their incomes increase

inferior good

a good that consumers demand less of when their incomes increase