Demand and Consumer Choice

Flashcards covering key concepts from Chapter 2 on demand and consumer choice.

Individual Demand Curve

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

Ceteris Paribus

A Latin phrase meaning "holding other things constant" used in economic analysis.

Law of Demand

The principle that quantity demanded rises as the price falls.

Market Demand Curve

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

Marginal Benefit

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

Diminishing Marginal Benefit

The principle that each additional item yields smaller additional benefits than the previous one.

Shifts in Demand Curve

Changes in demand due to factors other than price, resulting in a new demand curve.

Normal Good

A good for which demand increases as income increases.

Inferior Good

A good for which demand decreases as income increases.

Substitute Goods

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

Complementary Goods

Goods that are consumed together; demand for one decreases when the price of the other rises.

Opportunity Cost Principle

The cost of forgoing the next best alternative when making a choice.

Movements Along the Demand Curve

Changes in quantity demanded resulting from price changes, without shifting the curve.

Change in Demand

A shift of the entire demand curve due to factors other than price.

Consumer Preferences

The factors influencing consumer choices and demand patterns.

Network Effects

The increase in the value of a product as more people use it.

Congestion Effects

The decrease in value of a good when too many people use it.