Unit 2 Economics DEMAND Essentials

Demand

Consumers' wants and needs for a particular good, service, or product.

Demand Curve

Graphical representation of a demand schedule.

Law of Demand

When consumers react to an increase in a good’s price by consuming less of that good and more of other goods.

Income Effect

When purchasing power shifts due to a change in income or a change in the price of goods.

Law of Diminishing Marginal Utility

The more people consume of an item, the less satisfaction they receive from each additional unit.

Movement Along the Demand Curve

Happens when the price of a good changes, causing a change in the quantity people want to buy while other market conditions stay the same.

Non-Price Determinants of Demand

Conditions other than a product's price that change how much people want to buy (e.g., consumer income, tastes/preferences, prices of related goods, future price expectations, number of buyers).

Shift of a Demand Curve

A change in the entire graph line when buyers want more or less of a product at every price due to outside factors rather than a change in the item's price itself.

Quantity Demanded (Quantity of Demand)

The exact amount of a product or service that buyers are willing and able to buy at a specific point in time.

Substitution Effect

The shift in consumer demand toward a cheaper good when the price of another good rises.