Economics- Chapter 4: Demand

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Economics- Chapter 4: Demand

This Is Basically Talking About Demand, And The Understanding
of It. It Is An Important Part Of Economics.

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What is Demand?
Demand is the amount of good or services a consumer is WILLING and ABLE to buy at VARIOUS prices during a given time period
What is QUANTITY Demanded?
The amount of a good or service that a consumer is willing and able to buy at each PARTICULAR price during a given time period
What does the law of demand infer?
An increase in the price of a good will decrease the quantity demanded. (inverse relationship) when P goes up, QD goes down.
What is diminishing marginal utility?
The natural decrease in the utility of a good or service as more of it is consumed.
What are the determinants of demand? (5)
1) Consumer taste and preferences 2) Market size 3) Income 4) Prices of related goods 5) Consumer expectations
What are three components of Market Size?
1) Business decisions 2) Government decisions 3) New technology
What is ELASTIC demand?
Small change in price will cause relatively large change in Quantity demanded
Three things that cause ELASTIC demand...
1) Product is not a necessity 2) Has many readily available substitutes 3) Product's cost is large portion of income.
What does an ELASTIC curve look like almost?
Disposable Income vs. Purchasing Power
Disposable income is money left after all taxes are taken out, while purchasing power is the ability to purchase goods and services.