Part B: Demand

Market

Any arrangement where buyers and sellers of goods, services or resources are linked together to carry out an exchange

Competitive market

Many buyers and sellers acting independently, so no one can influence the price; price is set by demand and supply

Demand (individual)

The various quantities of a good a consumer is willing and able to buy at different possible prices during a particular time period, ceteris paribus

Law of demand

A negative relationship between the price of a good and its quantity demanded over a particular time period, ceteris paribus

Market demand

The sum of all individual consumers' demands for a good

Marginal benefit (MB)

The additional benefit gained from consuming an additional unit of a good or service

Diminishing marginal benefit (utility)

As consumers consume additional units of a good or service, the MB decreases

INEPT (determinants of demand)

Income, Number of consumers, Expectations, Price of related goods, Tastes and preferences

Normal good

A good whose demand increases when income increases (e.g. taxi)

Inferior good

A good whose demand decreases when income increases (e.g. public bus)

Substitutes

Goods that satisfy a similar need (e.g. Coke vs Pepsi)

Complements

Goods that are used together (e.g. phone and phone case)