Demand

Demand

the willingness and ability of buyers to purchase a good or service

Law of Demand

the price of a good and the quantity demanded are inversely related, ceteris paribus

Quantity demanded

specific # of units a good that indivs are willing and able to buy at particular price during a time period

words, symbols, demand schedule, demand curve

4 ways to represent law of demand

Demand scedule

numerical representation of law of demand

Demand curve

graphical representation of inverse relationship between price+quantity demanded specified by law of demand

law of diminishing marginal utility

satisfaction gained by consuming same good multiple times decline as amount consumed increase

Individual demand curve

represents price-quantity combos of particular good for 1 buyer

Market demand curve

represents price-quantity combos of good for all-buyers

Change in quantity demanded

movement from one point to another on same demand curve caused by change in price of good

Change in demand

shift in demand curve

indivs willing and able to buy more units of good despite price

income, preferences, prices of related goods, # of buyers, expectations of future prices

Factors causing demand curve to shift

price

Change in quantity demanded is caused by __________

Normal Good

demand rises/falls as income rises/falls

Inferior Goods

"alternatives"

Neutral Goods

a good for which demand does not change as income rises or falls

Preferences

affects amount of a good ppl are willing to buy at particular price

- trending

substitutes and complements

Prices of Related Goods

Substitutes

satisfy similar needs or desires

Comlpements

consumed jointly

Number of Buyers

more buyers = higher demand, fewer buyers = lower demand

Expectations of Future Price

buyers who expect price of a good to be higher next month may buy it now, thus incerasing current demand for the good