Ch 3 - Demand

Complements

Complements

________: goods which have a joint demand as they enhance the satisfaction derived from another good.

Substitutes

________: alternative goods can satisfy the same want and need.

price availability

A change in the ________ of either will have an effect on the demand for complementary goods.

Status quo

________: overwhelming amount of choices.

Demand

________: the quantity of a product which consumers are willing and able to buy.

Complementary goods

________: demand decreases, quality demand decreases.

Substitute goods

________: demand increases, quality demanded decreases.

rationality

Bounded ________: theory that consumers have limited rational decision making driven by cognitive ability, time constraint, and imperfect information.

Effective demand

________: by purchasing power, the purchaser has the money to pay for the product.

Ineffective demand

do not have purchasing power

Law of demand

states that as the price of product falls, the quantity demanded will increase

PINTE

1. Prices   2. Income   3. Number of buyers    4. Taste/preference  5. Expectations

Methods of decreasing demand

• Income drops

• Substitution falls

• Compliments rises

• Buying discouraged

Methods of increasing demand

• Income rises (normal goods)

• Price of substitution rises

• Price of complementary falls

• Encouraged buying

• Population likely to buy increases