Demand

Market

Anyplace where, or mechanism by which buyers and sellers interact to trade goods, services or resources

Good

A tangible product that consumers, firms or governments wish to purchase

Service

An often intangible product or action that consumers, firms or governments wish to purchase

Resources

The inputs used to produce goods and services; also known as factors of production, falling into four categories : land, labor, capital, and entrepreneurial ability

Law of demand

A principle in economics that states that as the price of a good, service or resource rises, the quantity demanded will decrease, and vice versa, all else held constant

Demand schedule

A tabular representation of the relationship between the price of a good, service, or resource and the quantities consumers are willing and able to buy over a fixed time period, all else held constant

Demand curve

A graphical representation of the relationship between the price of a good, service, or resource and the quantities consumers are willing and able to buy over a fixed time period, all else held constant

Quantity demanded

The quantity of a good, service, or resource that consumers are willing and able to buy at a given price

Income effect

The effect that a change in the price of a good, service, or resource has on the purchasing power of income

• when prices decrease the purchasing power of income increases and consumers are able to purchase more goods, services or resources

Substitution effect

The effect that a change in the price of one good, service, or resource has on the demand for another

• An increase in the price of one good will increase the demand for its substitutes and vice versa

Diminishing marginal utility

The negative relationship between the quantity of a good, service, or resource and the marginal utility obtained from each additional unity consumed in a given period of time

Market demand

The overall, or total demand for a good, service, or resource. It represents the horizontal summation of the quantities demanded by individuals, firms, states, or even nations at each price over a fixed time period, all else held constant

Change / Shift in demand

A change in the quantity of a good, service or resource demanded at every price

Graphical increase in demand

Represented by a rightward shift

Graphical decrease in demand

Represented by a leftward shift of the demand curve

Movement along the demand curve

A change in the quantity of a good, service, or resource demanded due to a change in its price

Normal good

A good for which there is a direct relationship between the demand for the good and income. For normal goods, an increase in income increases demand, and a decrease in income decreases demand; a good with a positive income elasticity of demand

Inferior good

A good for which there is an inverse relationship between the demand for the good and income. For inferior goods, an increase in income decreases demand, and a decrease in income increases demand; a good with the negative income elasticity of demand

Tastes and preferences

The perception of the desirability associated with consuming a good, service, or resource

Buyers

Market participants who seek to obtain goods, services and resources

Expectations

The anticipation by individuals and firms of costs and benefits that lie in the future

Substitutes

Goods, services, or resources that are viewed as replacements for one another

Complements

Goods, services, or resources that are used or consumed with one another