Demand and Consumer Choice

These flashcards cover key terms and concepts related to demand and consumer choice, including definitions and principles every student should know.

Individual Demand Curve

A graph that plots the quantity of an item an individual plans to purchase at each price.

Law of Demand

The tendency for the quantity demanded to be higher when the price is lower.

Ceteris Paribus

A Latin phrase meaning 'holding other things constant'; used to isolate the effect of one variable in economic analysis.

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Market Demand Curve

A graph plotting the total quantity of an item demanded by the entire market at each price.

Normal Good

A good for which higher income causes an increase in demand.

Inferior Good

A good for which higher income causes a decrease in demand.

Complementary Goods

Goods that are often consumed together; an increase in the price of one reduces the demand for the other.

Substitute Goods

Goods that can replace each other; when the price of one rises, the demand for the other increases.

Factors that Shift Demand Curves

Income, preferences, prices of related goods, expectations, congestion effects, and the type and number of buyers.

Diminishing Marginal Benefit

The principle that as more units of a good are consumed, the additional satisfaction derived from each new unit decreases.

Opportunity Cost Principle

The concept that the true cost of something is what you give up to get it.

Movements Along the Demand Curve

Changes in quantity demanded resulting from changes in the price of the good.

Shifts in the Demand Curve

Changes in demand due to factors other than the price of the good itself.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in price.

Economic Surplus

The difference between the total benefits received from a good or service and the total costs of that good or service.