3.1.2.1 - Determinants of Demand

Demand

The amount of a good or service we would like to buy at a certain price in a given period of time

Effective Demand

The amount of a good or service we would like to buy at a certain price in a given period of time, given the ability to purchase

Law of Demand

When price rises, quantity demanded falls (and vice versa)

Demand Schedule

A table showing quantity demanded at different prices

Demand Curve

A curve showing the quantity demanded of a good or service at any given price level

Ceteris Paribus

All other things being equal (held constant)

Extension

An increase in demand due to a movement downwards along the demand curve when price falls 

Contraction

A decrease in demand due to a movement upwards along the demand curve when price rises

Shift

A parallel change in the position of a curve due to a change other than the price of the product

Complement

A good / service which goes with another in consumption e.g. fish and chips

Substitute

A good / service which can be used to replace another e.g. butter and margarine. They are in competitive demand

Joint / Complementary Demand

The demand for one good / service leads to the demand for another - they are complements

Competitive Demand

The demand for a good / service is in direct competition for the demand for another - they are substitutes

Derived Demand

The demand for an input which is dependent on the demand from the good or service it produces

Composite Demand

Demand for a good which has multiple uses e.g. wheat for human food, cattle food and biofuel