What is Demand?
What is demand?
The desire to have some good or service and the ability to pay for it
What effect describes the change in the amount of a product that a consumer can buy because of his/her income
Income effect
What described how responsive consumers are to price change in the marketplace?
Elasticity of demand
Describe the law of demand.
When the price of a product goes down, the demand increases
Describe the substitution effect
when consumers react to a change in the price of a good or service by buying a substitute product
What type of change in demand will there be if the products demand is inelastic?
relatively small change
What is a market demand schedule?
A table showing how much of a product a market will buy
What are products that consumers demand less of when their incomes rise?
Inferior products
What types of products are usually INELASTIC?
Necessities (power, gasoline)
What is the market demand curve?
a graph showing how much of a product a market is willing and able to buy
What explains the shape of a demand curve?
The law of diminishing marginal utility
What does an inelastic demand curve look like?
Steep slope
What is the relationship between quantity demanded and price?
An inverse relationship
What does each point on the graph represent?
change in quantity demanded
What is the method used to measure the elasticity of demand?
Total revenue test