The Theory of Demand

demand

the willingness and the ability of consumers to buy goods and services

Law of Demand

the quantity of a good demanded per period of time will fall as price rises and will rise as price falls, ceteris paribus

quantity demanded

the quantity buyers are willing and able to buy at a particular price during particular period of time, ceteris paribus

demand schedule

A table that shows the quantities of a good or service demanded at different prices during a particular period, all other things unchanged

Demand Shifters

A variable that can change the quantity of a good or service demanded at each price

complements, complementary goods

two goods in such relationship: a reduction in the price of one good increase the demand for another

substitutes

goods used instead of one another. Relationship: a reduction in the price of one good reduces the demand for another

normal good

a good for which the demand increases as income rises and decreases as income falls

inferior good

a good for which, other things equal, an increase in income leads to a decrease in demand

Veblen Good

type of luxury good for which increase in price causes increases in demand as the symbol of status

change in demand

a shift of the demand curve caused by a change in a variable which is non-price

Giffen good

a good for which an increase in the price raises the quantity demanded

change in quantity demanded

a movement along the demand curve resulting from a change in the price of the goods

demand curve

a graphical representation of a demand schedule

Demand Function

relationship between the quantity demanded of a good and factors which determine it

Market Demand

the sum of all the individual demands for a particular good or service for each price

individual demand

the quantity demanded of an exact consumer at each price