Demand and the Demand Curve

These flashcards cover key concepts related to demand and the demand curve as discussed in the lecture.

Demand

The willingness and ability of buyers to purchase different quantities of a good at different prices during a specific time period.

Law of Demand

As the price of a good rises, the quantity demanded falls; as the price falls, the quantity demanded rises, ceteris paribus.

Ceteris Paribus

A Latin term meaning 'all other things constant' used in economic analysis to isolate the effects of one variable.

Quantity Demanded

The number of units that individuals are willing and able to buy at a specific price during a time period.

Demand Schedule

A numerical tabulation showing the quantity demanded of a good at different prices.

Demand Curve

A graph illustrating the relationship between the price of a good and the quantity demanded.

Substitution Effect

Consumers may switch to cheaper alternatives when prices rise.

Income Effect

Higher prices reduce the purchasing power of consumers, limiting their ability to buy a product.

Diminishing Marginal Utility

The additional satisfaction from consuming one more unit diminishes as consumers buy more of a product.

Market Demand Curve

Represents the price-quantity combination for all buyers in the market.

Inferior Good

A good for which demand decreases as consumer income increases.

Normal Good

A good for which demand increases as consumer income increases.

Complements

Goods that are used together; demand for one rises when the price of the other falls.

Substitutes

Goods that satisfy similar needs; demand for one rises as the price of the other rises.

Shift in Demand Curve

A change in demand due to factors like income or preferences, resulting in a rightward or leftward shift.

Movement along the Demand Curve

A change in quantity demanded due to a change in the price of the good.