Term
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Definition
| the increase or decrease of purchasing power brought on by changes in prices of g/s |
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Term
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Definition
| The amount of money consumers have available to spend on g/s -ex- pp^, qd v; pp v qd^ |
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Term
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Definition
| As the price of a g/s rises, so will the tendency of consumers to substitute for that g/s -ex- generic g/s |
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Term
| Diminishing marginal utility |
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Definition
| as more of a g/s is consumed, satisfaction should increase. But at some point, it will diminish |
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Term
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Definition
| The amount of satisfaction you receive from consuming a product |
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Term
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Definition
| The degree to which a change in P affects qd |
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Term
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Definition
| when a small increase in P causes a major decrease in qd -- there are g/s that are not necessities and for which there are legitimate substitutes; eg, steak? compact disk?. QD is highly responsive to changes in P |
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Term
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Definition
| When a major change in the P of a g/s has minimal effect on QD -- there are g/s that are necessities and have no legitimate substitutes; eg, toilet paper/cigarettes |
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Term
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Definition
| The amount of a g/s a consumer is willing and able to buy at a given price during a given time |
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Term
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Definition
| As the price of a g/s rises, the QD will fall and as Pv, the QD^ |
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Term
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Definition
| economic model that shows the inverse relationship between P and QD |
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Term
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Definition
| plots the info from the demand schedule to illustrate the relationship between P and QD -- always have negative slopes |
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Term
| 5 determinants of demand (NPF) |
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Definition
| Consumer taste/preference; market size/# of buyers; income: normal and interior goods; prices of related goods: substitutes and complementary; consumer expectations of future income |
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Term
| Consumer taste/preference |
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Definition
| An increase or decrease in popularity of a g/s will cause a d-curve shift. Ex turkey in Nov |
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Term
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Definition
| the # of potential buyers that may demand a g/s. This occurs because of a government decision. eg Drinking age 18 |
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Term
| Income: normal and inferior goods |
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Definition
| When HH income increases, so does demand for a g/s and vice versa. Don't confuse with income effect=>price factor. Eg you get a $5,000 bonus except for inferior goods! eg. fish sticks- raise=you get lobster instead |
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Term
| Prices of related goods: substitutes and complementary |
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Definition
| A change in the price of one g/s brings a shift in demand for another g/s. These g/s are either substitutes or complements. |
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Term
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Definition
| g/s that can be used to replace the purchase of the original g/s when prices rise; eg, buy electric razor when shaving cream rises |
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Term
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Definition
| g/s which are commonly used with other g/s. eg hot dogs and hot dog rolls |
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Term
| Consumer expectations of future income |
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Definition
| If HH expect increasing income in the near future then demand for g/s increase ex. Layoffs are coming! |
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Term
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Definition
| Income effect (purchasing power), substitution effect, diminishing marginal utility |
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