Determinants
Define Complements
What are Goods or Services that are consumed or used together?
This is the desire, willingness, and ability of a consumer to purchase a good or service.
What is demand?
If the price of coffee goes up, the demand for tea, a competing product, will likely do this.
What is increase?
he measure of how much quantity demanded changes in response to a change in price.
What is elasticity?
The income effect and the substitution effect are two reasons for this economic law.
What is the Law of Demand?
One aspect of Consumer Tastes
What are advertisements, fashion trends, and seasonal changes?
This law states that as the price of a good increases, the quantity demanded decreases.
What is the Law of Demand?
A good that is purchased with another good.
What is a complementary good?
A product like gasoline or medicine that has very few substitutes, making it have this type of demand.
What is inelastic demand?
The change in quantity demanded due to a change in the relative price of a good.
What is the substitution effect?
Define Expectations
What are the beliefs or assumptions that consumers hold about future market conditions, prices, and economic events?
A graph that shows the relationship between the price of a good and the quantity demanded.
What is a demand curve?
This type of good has a direct relationship between its price and the demand for its counterpart.
What is a substitute good?
A product with many substitutes, such as a specific brand of soda, has this type of demand.
What is elastic demand?
A good like store-brand cereal or used clothing, for which demand decreases as income increases.
What is an inferior good?
An example of Number of Consumers effecting demand
Anything that involves a pool of consumers shrinking or growing that effects demand.
This is the specific amount of a good or service consumers are willing and able to buy at a certain price.
What is quantity demanded?
If the price of a camera drops, the demand for camera lenses will likely do this.
What is increase?
A product is considered to have this if its demand is a necessity.
What is inelastic?
This is the point at which the quantity demanded and the quantity supplied are equal.
What is market equilibrium?
Anything having to do with income-based increase or decrease in demand.
What three things must be present for a consumer to have demand for a product?
What are desire, willingness, and ability?
The price of hot dogs falls, causing the demand for hot dog buns to rise. Hot dogs and hot dog buns are examples of this type of good.
What are complementary goods?
Give an example of a product with elastic demand and explain why it is elastic.
Answers vary.
This concept explains that demand for a good can be influenced by consumer expectations of what other consumers will buy. A well-known example is the "Veblen effect," where demand for luxury goods increases as their price rises because owning them signals high status.
What is the Bandwagon Effect?