2.1 Demand Economics HL
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6 Terms
Demand
Demand is the amount of a good/service that a consumer is willing and able to purchase at a given price in a given time period.
The three key assumptions behind the law of demand
The income effect, the substitution effect, and the law of diminishing marginal utility.
What is the law of diminishing?
The Law of Diminishing Marginal Utilitystates that as additional products are consumed, the utility gained from the next unit is lower than the utility gained from the previous unit
Marginal utility
Marginal utility is the additional utility (satisfaction) gained from the consumption of an additional product
A normal good
A normal good is a good or service for which demand increases when income